In a ruling that sent shockwaves across the nation the High Court yesterday decided that Reserve Bank Directive R120 2018 was not appropriate and US dollar-denominated debts could not be paid in Zimbabwean at the 1:1 rate that was established. This was in the case brought to the court by Beattie Stone Studio who previously had courts rule against their case against CABS, the RBZ and the ministry of Finance. The shockwaves were largely expressed as annoyance at another change in direction when people had just gotten over the last change. This ruling has of course thrown the cat amongst the pigeons and the direction going forward is likely to be littered with complexity.

After being turned away by the courts in a previous attempt Beattie Stone Studio appealed the matter. Beattie Stone deposited an amount of US$142000  with CABS and demanded that CABS should avail the US$142000 to them in the currency deposited and not in Zimbabwean dollars as the directive advised.

Cat amongst the pigeons

Of course, many questions were brought up by this judgement immediately and one gets a feeling is only the beginning. Does this case impact the Zambezi Gas ruling? The Zambezi Gas ruling held up SI 33 of 2019 by maintaining that debt owed for services rendered and billed in US dollar could be paid in Zimbabwean dollars at 1:1. If it indeed does impact that questions now arise of those who had debts denominated in US dollars or other foreign currencies that were paid in Zimbabwean dollars. Do the creditors have recourse to recalculate the payments made to the US dollar at the prevailing interbank rate at the time of payment(s) and request the balance if there is one in US dollars? Will CABS, the RBZ and the Ministry of Finance appeal the matter in the Supreme Court? This is the most likely course of events.

In addition to these questions, there are also real considerations of how much damage this has done. Stone Beattie Studio will and should be happy with the judgement but it does further damage, if that is possible, to the reputation of the custodians of Zimbabwe’s economy and finances. This is not new, the policies were widely criticised when they were adopted but this adds further proof to the criticisms levelled against government policy. The judiciary in Zimbabwe has many times been accused of being partial with a bias towards those in the offices at the Apex Bank and the Ministry of Finance and this judgement will be used by some as evidence of an impartial judiciary. However, it also opens up a can of worms as it can also point to a lack of legal consultation by the powers that be.

What comes next?

We are likely to see that Supreme court challenge before the ink dries on this judgement. Meanwhile creditors, past and current across the nation are likely to have their calculators out combing through payments made in the Zimbabwean dollar era and calculating just how much of a shortfall there is.