ZIMBABWEANS living and working abroad sent more than US$374
million back home during the first six months of the year, which represents a
26 percent rise from the US$298 million that was recorded in the same period in
2019, official statistics show.
Despite the headwinds caused by the coronavirus, which has
disrupted global supply chains and affected demand in key markets, exports also
rose by 5 percent to US$2 billion in the same period.
Overall, the country’s foreign currency inflows grew to
US$3,2 billion, up from US$2,7 billion last year.
While exports contributed 62 percent to the cumulative haul,
Diaspora remittances weighed in with 12 percent.
Official statistics presented by the Reserve Bank of
Zimbabwe (RBZ) Governor Dr John Mangudya in the Monetary Policy Statement (MPS)
on Friday indicate that June saw the highest inflows from the Diaspora at US$85
million, followed by February (US$69 million), May (US$66,7 million) and March
(US$61 million).
Remittances were lower in April at US$31 million. The
impressive trend continued in July when US$91,8 million was injected into the
local economy. However, foreign currency outflows in the January-June period,
as represented by foreign payments, topped US$1,8 billion, which yields a
healthy net foreign currency inflow position of US$1,4 billion.
The favourable balance of payments position is expected to
remain for the remainder of the year owing to increased export earnings.
“Reflecting favourable foreign currency performance during
the first half of the year, albeit under a harsh operating environment, the
country’s balance of payments is projected to remain favourable, driven by
improvements in exports and Diaspora remittances,” Dr Mangudya said.
Foreign currency inflows are expected to further buttress
the stability of the exchange rate, which is critical in ensuring that prices
of goods and services also remain stable.
There has been relative stability in prices since the
introduction of the foreign currency auction system on June 23 this year.
The decision to allow foreign currency transactions has
also resulted in increased inflows into the formal market.
“Following the decision to allow free funds in pricing of
goods and services in the economy, the Bank is encouraged by the growth of the
foreign currency accounts from US$352 million in January 2020 to US$404,8
million as at end of July 2020,” he said.
The central bank has also decided to make it mandatory for
20 percent of the foreign currency that would have been generated by businesses
to be sold (liquidated) at the point of depositing into the domestic foreign
currency account. However, this will not apply to “recipients of free funds,
including individuals, embassies, non-governmental organisations, tobacco and
cotton producers and domestic FCAs for fuel companies”.
The central bank recently indicated that local banks were
sitting on more than US$1 billion in foreign currency accounts that could be
easily used to support the forex auction, where allotments have ranged between
US$10 million and US$19 million weekly over the past nine sessions.
There is, however, concern that while the country continues
to realise significant forex inflows, imports for commodities that could
ordinarily be produced in the country is the major challenge.
Significant amounts are currently being used to import
maize and wheat.
“The RBZ continues to bemoan lack of productivity to self-sustain ourselves so that the foreign
currency we are using to import maize and wheat is used to feed the auction
system,” Dr Mangudya recently told The Sunday Mail.
“We need 30 000 tonnes of wheat in this country every
month.
“That is about US$12 million, which we are removing from
the auction, and maize we need about 100 000 tonnes per month; that is about
US$28 million, which we are removing from the auction. So you can see already
that more than half the country’s forex requirements per month go to import
basic food commodities in the form of grains and therefore you want to reduce
that to put money on the auction.”
Government has since invested in the agriculture sector to
increase output, with this year’s wheat harvest projected to be significantly
more than last year’s production. Sunday Mail
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