BoZ Introduces Forex Limits, Harming Remittances

The Bank of Zambia has introduced new foreign exchange currency restrictions, placing caps on individual, commercial and account holder transactions.

On the 24th May 2021, the Deputy Governor of Operations, Francis Chipimo, signed a circular which outlined the new over-the-counter foreign currency cash transaction limits.

The limits are outlined below:

• The aggregate over-the-counter foreign currency cash transactions of a bureau de change with commercial banks shall not exceed US$ 20,000 or 70% of its regulatory capital per day.

• The aggregate over-the-counter foreign currency cash transactions of a bureau de change with an individual shall not exceed US$ 5,000 per day.

• The aggregate over-the-counter foreign currency cash transactions of a commercial bank with an account holder shall not exceed US$ 10,000.

• The aggregate over-the-counter foreign currency cash transactions with an individual without a bank account shall not exceed US$ 5,000.

Expected to be in place from 1st June to 31st July, the limitations are likely to have several negative impacts, including reducing remittances into the country. With almost $1million coming into the country yearly through remittances from abroad, the limits will likely see this important supply of funds take a slump.

The government-owned entity therefore could have made a decision which sees a decline in the country’s overall GDP over this period, with reasoning behind the decision yet to be given.

Photo: Norvanreports