Si32is areturn to forex controls-expert

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Si32is areturn to forex controls-expertSI 32 is a return to forex controls-Expert

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A financial expert says the introduction in of Statutory Instrument number 32 of 2013 has marked a return to foreign exchange controls in Zambia.

Over the weekend, Finance Minister Alexander Chikwanda announced that he had signed SI 32 of 2013 aimed at monitoring balance of payment in a transparent manner.

The new law applies to financial service providers licensed under the Banking and Financial Services Act, and importers of goods or services exceeding 10,000 US dollars or the equivalent in other foreign currency.

And any person, who contravenes any provision contained in SI 32 of 2013, will be deemed to have committed an offence and is liable, upon conviction, to a fine not exceeding one hundred thousand penalty units or to imprisonment for a period not exceeding ten years, or to both.

But Maambo Hamaundu said although government keeps denying that Zambia has returned to forex controls, the new Statutory Instrument has effectively reintroduced forex controls in a limited fashion.

“For me whether they accept it or deny it, what we are seeing now is a return to foreign controls albeit in a limited manner,” Mr. Hamaundu said.

He said, “You have provisions in the SI that limit the cash amounts that people can withdraw from a financial services provider to US$ 5,000 per month. We never had such restrictions on cash withdraws previously and that in essence is a control.”

Mr. Hamaundu added, “Many of us did anticipate that government was by and large going to introduce some measure of foreign exchange controls and a quick glance at SI 32 shows that there are controls, they have introduced foreign exchange controls although in a limited fashion.

Mr. Hamaundu explained that the new law has also come with a lot of paperwork required to be met by all exporters of goods and services which might add to the cost of doing business.

“All those forms requiring to be filled will bring administrative challenges for most businesses,” he said.

Mr. Hamaundu has warned that the new Statutory Instrument might have long term negative effects on the Zambian economy.

He said foreign investors will opt to sit on the fence and not to commit huge financial resources in Zambia because of the new restrictions.