FOREIGN airlines have at least US$50 million in payments
stuck in Zimbabwe, with some warning they might be forced to suspend flights
into the country.
Zimbabwe is in the grip of a debilitating foreign currency
crisis, blamed on a collapsed productive base, widening trade gap and
diminishing foreign capital flows.
The Reserve Bank of Zimbabwe has, since May 2016,
maintained a priority system to allocate scarce foreign currency.
The central bank is grappling with a foreign payments
backlog, which could potentially affect fuel and electricity supplies as well
as other vital imports for key economic sectors.
The RBZ has secured a US$600 million facility from the
African Export Import Bank to ease the foreign payment backlog.
Last week, the International Monetary Fund said Zimbabwe
had less than one month’s forex reserves, below the recommended minimum three
months’ cover.
In March this year, The Financial Gazette reported that
foreign currency payments due to global and regional airlines had reached US$30
million.
Major global airlines started tightening screws on
liquidity-starved Zimbabwe shortly afterwards, in April.
At least five global airlines, namely Qantas Airways,
Lufthansa, KLM Royal Dutch Airlines, Air France and Delta Airlines instructed
travel agents worldwide to bill their passengers in cash or stop accepting
bookings altogether to avoid non-settlement of obligations from Zimbabwe’s
banks, which are affected by the acute shortage of foreign currency.
In August, the central bank said a total of US$57,25
million had been paid to both the International Air Transport Association
(IATA) and airlines. Of that, US$43,75 million was paid through the RBZ, with
the balance being processed through the banks.
In the latest illustration of the foreign currency crisis
engulfing the country, IATA executives flew into Zimbabwe last week, the second
time the global board has held crucial meetings with the RBZ in a fortnight, as
they battle to find a solution.
Central bank governor John Mangudya confirmed the meeting,
when contacted yesterday.
“We had a good meeting with IATA on how we are addressing
the backlog,” Mangudya said.
“It is being addressed through a gradual payment
arrangement that the Reserve Bank discussed and agreed with IATA.”
This week, Zimbabwe Tourism Authority (ZTA) chief executive
officer, Karikoga Kaseke confirmed the escalating airline payment crisis.
The ZTA chief said current levels of unremitted foreign
currency to airlines had sparked anxiety in the industry and government.
He said the backlog was among the issues discussed by State
agencies at a meeting convened by ZTA last week.
“It is now slightly over US$50 million,” Kaseke told The
Financial Gazette.
“We talked about it last week when we had a meeting with
the Zimbabwe Republic Police and other organisations. It was one of the topical
issues. We have to do something about it,” said Kaseke.
A cross section of travel and aviation industry executives
who spoke to The Financial Gazette warned of a repeat of the 2007/2008 exodus
of foreign airlines out of the country, partly in response to falling trade,
but also because of the currency restrictions.
Between 2000 and 2007, 45 scheduled airlines including Air
France, KLM, Lufthansa, Swiss Air and British Airways discontinued services
into Zimbabwe as political turmoil mounted, pushing arrivals down to less than
one million, from 2,5 million in 1999.
Regional airlines, Ethiopian Airways, South African Airways
(SAA), Kenya Airways, British Airways’ ComAir, Emirates, Taag Angolan, Namibian
Airways and Malawian Airways are among the foreign carriers caught up in the
payment gridlock.
SAA controls the lion’s share of the Zimbabwean market and
is possibly the hardest hit by the foreign currency crisis.
Its Zimbabwe country office has been among the delegations
that have met authorities over the crisis at various times this year.
Africa’s third largest carrier operates close to 30 flights
per week into Harare, Victoria Falls and Bulawayo, according to official
statistics.
Kenya Airways country manager, Stella Ndunge, told a
tourism conference last week that the airline would pull out of the country if
the payment crisis was not resolved.
“As foreign airlines, we have a limit in terms of the funds
that can be blocked in a country. Once we reach that limit we have no other
option but to pull out,” Ndunge said.
Namibian Airways country manager, Forbes Zaranyika, told
The Financial Gazette that negotiations were still ongoing.
“IATA is helping us. They have engaged the government and
we are still trying to work it out so it might be premature to preempt what is
going on. So let that process get to its conclusion (but) if it fails then it
will be something else,” Zaranyika said.
Association of Zimbabwe Travel Agencies president, Betty
Katiyo, fears the foreign currency crisis would have far reaching implications
on the operations of the travel industry. Financial Gazette
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