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Originally published Monday, February 11, 2013 at 4:26 AM

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Zimbabwe central bank announces tougher cash rules

Zimbabwe's central bank said it is enforcing tougher rules Monday to rein in "the delinquent behavior" of businesses holding cash abroad.

Associated Press

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HARARE, Zimbabwe —

Zimbabwe's central bank said it is enforcing tougher rules Monday to rein in "the delinquent behavior" of businesses holding cash abroad.

The Reserve Bank said in a statement that $360 million in export proceeds were being kept offshore, worsening acute cash shortages in the nation's "prevailing liquidity crunch." It said companies not repatriating their foreign cash within 90 days of earning it will be red flagged in "investigations to bring the culprits to book."

In the past, breaches of exchange control rules generally carried a penalty of heavy fines.

The central bank acknowledged that the collapse of many long established industries led to an over reliance on imported goods in 2012. Zimbabwe spent $7.4 billion on imports last year but earned only $3.8 billion from all of its exports, the bank said.

It said that the deficit was excessive and unsustainable. Export performance was "anemic" in the past year, industry was running far below its capacity and mining was affected by volatile world commodity prices, projected to continue in 2013.

Foreign direct investment to re-equip factories and mines was also limited as a black empowerment program for 51 percent local ownership of businesses "gained substantial momentum" last year, the Reserve Bank said.

The independent Confederation of Zimbabwe Industries estimates that imports, mainly from South Africa, account for about 70 percent of products in the country's supermarkets and food stores.

Decades-old brands of locally-made potato chips, breakfast cereals, soap, toothpaste and other toiletries and canned goods have disappeared from store shelves as domestic producers failed to compete with mass produced imports on pricing, volumes and packaging. Factories were also hit by daily power and water outages in recent years.

The central bank said inflation was held at below 4 percent last year. Zimbabwe abandoned its own currency in 2009 to eradicate world record inflation of billions of percent and uses the U.S. dollar and the South African currency.

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