The Reserve Bank of Zimbabwe (RBZ) has canceled the procurement of fuel from service stations by motorists using foreign currency fuel coupons.

RBZ Governor Gideon Gono was quoted by the Sunday Mail as saying that the redemption of the coupons would be in local currency and the conversion would be done at the interbank rate prevailing as at February 13 2006.

"The foreign currency fuel coupons' framework was introduced in August 2005 as a vehicle to mobilize free funds and increase the availability of fuel for the motoring public as a contribution towards the turnaround of the economy.

The central bank cited abuse of the facility by some members of the public who were engaging in speculative and parallel market activities as the main reason behind the cancellation of a facility that has been running for the past six months.

The central bank said the coupons have to be redeemed by February 28 and this effectively means that service stations would no longer be allowed to sell fuel in foreign currency.

When the system was introduced, the price of the U.S. dollar was reasonable in terms of conversion to the price of a liter of fuel, but some members of the public were now using it as a proxy for parallel market dealings.

Gono said the disadvantages of that foreign currency coupon system now outweigh the benefits and the RBZ did not believe that system is still a sharp instrument for mobilizing foreign currency.

He said evidence of flourishing black market activities could be gathered from the fact that most garages had no fuel yet there were many cars moving around the country.

Source: Xinhua