HARARE, Zim. – Chief Justice Luke Malaba recently passed a court forex ruling, and business experts are saying that his judgment is unfair.
The current forex ruling of the Supreme Court Chief Justice in Zimbabwe led business experts to warn that it will be a major factor that will drive down the much-needed investor confidence in the market.
Chief Justice Malaba ruled that debts which were acquired in the US dollar before the February 22 schedule last year, where the new regulations were imposed, can be discharged with a 1:1 rate in the local currency.
The ruling was sitting with Justices Susan Mavingira and Nicholas Mathonsi, which Chief Justice Malaba passed on Monday after the appeal field by Zambezi Gas Zimbabwe coal mining company at the Supreme Court.
Zambezi Gas Zimbabwe was contesting the ruling in favor of the mining services provider NR Barber (Private) Limited, given by the High Court.
According to the superior court, the Statutory Instrument 33/19 that came into force last year states that US-denominated debts would be exchanged and valued to the local currency using a rate of 1:1.
Economist John Robertson stated in an interview on Thursday that the latest ruling from the Supreme Court will cause the country to worsen the existing mistrust it’s getting from business investors.
Robertson said that the ruling passed by Chief Justice Luke Malaba came even though complainants have previously approached him. He further stated that the outcome shows that the major consideration for the passing of the ruling was the realization of the government that they owe about $9 billion worth of debt to banks and other local companies.
The economist stated that the recent move of the High Court is a smart way to pay its debts. He explained that even if the government was going to clear its billions of debts, the amount had to be multiplied by the current interbank rate, which is at 17.
And while the recent ruling was in favor of the government, it will work against businesses and investors. In the long term, investment opportunities for both local and international investors will have very difficult.
Henry Ruzvido, the president of the Confederation of Zimbabwe Industries, stated that the judgment from the High Court has far-reaching repercussions, which needs wider consultation before making it final.
Some have also taken their opinions on Malaba’s ruling on Twitter. Some Zimbabweans said that the ruling means that the courts have sanctioned expropriation.
The recent Supreme Court judgment is among a couple of surprising policy pronouncements by the government lately.