Zim­babwe in­fla­tion ticks up as re­mit­tances fall

The Star Late Edition - - BUSINESS REPORT - Tawanda Karombo

ZIM­BABWE yes­ter­day painted a pic­ture of de­clin­ing in­vest­ment flows, ris­ing in­fla­tion and dwin­dling re­mit­tances, as the Con­sti­tu­tional Court in Harare dis­missed a chal­lenge to Pres­i­dent Robert Mu­gabe’s pow­ers to de­cree the in­tro­duc­tion of bond notes.

For­mer vice-pres­i­dent and now op­po­si­tion leader Joice Mu­juru chal­lenged Mu­gabe’s con­sti­tu­tional author­ity to is­sue the notes.

“Our court case has been dis­missed on a tech­ni­cal­ity, but we are not sur­prised, and we will let the world know of our next step in the next 24 hours,” Mu­juru’s spokesman, Gift Nyadoro, said.

This devel­op­ment came as Zim­stats said that “prices, as mea­sured by the all-items Con­sumer Price In­dex (CPI), in­creased at an av­er­age rate of 0.23 per­cent from De­cem­ber 2016 to Jan­uary 2017”.

The agency said the yearon-year in­fla­tion rate for Jan­uary, as mea­sured by the CPI, stood at -0.65 per­cent, gain­ing 0.28 per­cent­age points on the De­cem­ber 2016 rate of -0.93 per­cent.

John Man­gudya, the gover­nor of the Re­serve Bank of Zim­babwe, said he ex­pected in­fla­tion “to move into pos­i­tive ter­ri­tory in 2017 for the first time since Septem­ber 2014, on the back of an an­tic­i­pated in­crease in in­ter­na­tional oil prices and do­mes­tic-sec­tor re­cov­ery”.

Im­ports for the same pe­riod have de­clined by 11 per­cent to $5.3 bil­lion (R70.04bn).

“Driven by mer­chan­dise trade de­vel­op­ments, the cur­rent ac­count deficit is es­ti­mated to have nar­rowed down by about 15.5 per­cent, from a deficit of $1.5bn in 2015, to a deficit of $1.3bn in 2016, partly on ac­count of the pro­jected de­cline in the im­port bill,” gover­nor Man­gudya said.

Re­mit­tances, which have be­come a ma­jor source of “im­port fi­nanc­ing”, de­clined by 17.9 per­cent in 2016 to $1.5 bil­lion.

Of the to­tal amount re­ceived in 2016, $779 mil­lion re­flects re­mit­tances from di­as­pora Zim­bab­weans, while re­mit­tances from in­ter­na­tional non-gov­ern­ment or­gan­i­sa­tions amounted to $795m.

“While pri­vate-sec­tor for­eign loans have con­tin­ued to be a ma­jor source of liq­uid­ity in the econ­omy since the adop­tion of the multi-cur­rency sys­tem in 2009, they also con­tinue to in­crease the coun­try’s gear­ing or lever­ag­ing ra­tio.

“This sce­nario is to be im­proved by en­cour­ag­ing eq­uity, as op­posed to re­ly­ing solely on loan fi­nance,” Man­gudya said.

PHOTO: AP

Zim­babwe Pres­i­dent Robert Mu­gabe has won a court chal­lenge to his pow­ers to de­cree the in­tro­duc­tion of bond notes.

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