For­eign pay­ments drop 24 per­cent

Chronicle (Zimbabwe) - - Business Chronicle - Oliver Kazunga

FOR­EIGN pay­ments pro­cessed by the bank­ing sec­tor in the first half of the year dropped by 24 per­cent to $2,7 bil­lion on the back of lim­ited for­eign cur­rency re­serves and im­port re­stric­tion mea­sures, the cen­tral bank has said.

Dur­ing the cor­re­spond­ing pe­riod last year, to­tal out­go­ing pay­ments were $3,5 bil­lion.

In the Mid-Term Mone­tary Pol­icy State­ment pre­sented last week, Re­serve Bank of Zim­babwe (RBZ) Gover­nor Dr John Man­gudya said:

“For the pe­riod Jan­uary to 30 June 2016, banks pro­cessed, on a cash flow ba­sis, to­tal out­go­ing pay­ments amount­ing to $2,7 bil­lion.

“This is at­trib­ut­able to the lim­ited for­eign ex­change re­serves within the econ­omy and the pos­i­tive ef­fect of the im­port com­pres­sion poli­cies, which pro­mote the im­por­ta­tion of crit­i­cal goods and ser­vices not avail­able on the lo­cal mar­ket.”

He said the cur­rent ac­count deficit was pro­jected to nar­row down from a deficit of $1,519 mil­lion in 2015 to a deficit of $1,069 mil­lion this year partly on ac­count of the pro­jected de­cline in the im­port bill. The pro­jected de­cline in im­ports in 2016 is mainly a re­sult of the var­i­ous mea­sures be­ing im­ple­mented to com­press im­ports as well as the eco­nomic slow­down, which has re­duced the coun­try’s im­port ab­sorp­tive ca­pac­ity. Fig­ures from the Zim­babwe Na­tional Sta­tis­tics Agency re­leased last month show that the coun­try’s im­port bill in the first seven months of the year went down by 21 per­cent to $2,89 bil­lion from $3,62 bil­lion dur­ing the same pe­riod last year. “A sus­tained cur­rent ac­count deficit poses sig­nif­i­cant chal­lenges as the coun­try re­lies on ex­port rev­enues to gen­er­ate liq­uid­ity to sup­port do­mes­tic eco­nomic ac­tiv­ity.

“In this re­gard, the need to at­tract both do­mes­tic and for­eign in­vest­ment to re­ju­ve­nate in­dus­try and gen­er­ate ad­e­quate for­eign ex­change re­serves to cush­ion the econ­omy from ex­ter­nal vul­ner­a­bil­i­ties, re­mains in­te­gral to eco­nomic re­vival ef­forts.”

The cap­i­tal and fi­nan­cial ac­count bal­ance is also pro­jected to de­cline from a sur­plus of $1,632 mil­lion in 2015 to a sur­plus of $845 mil­lion this year.

This was as a re­sult of the pro­jected de­cline in pri­vate sec­tor off­shore loans.

“The pro­jected de­cline in pri­vate sec­tor off­shore loans re­flects the re­duced ab­sorp­tive ca­pac­ity of the pri­vate sec­tor in con­comi­tance with weak­en­ing eco­nomic ac­tiv­ity,” said Dr Man­gudya.

For­eign di­rect in­vest­ment into the coun­try is also pro­jected to de­cline this year.

This un­der­scores the need to build in­vestor con­fi­dence to at­tract for­eign cap­i­tal, which is crit­i­cal for growth.

“The over­all bal­ance of pay­ments po­si­tion is pro­jected to de­te­ri­o­rate from a deficit of $25,8 mil­lion in 2015 to a deficit of $224 mil­lion in 2016.

“Within the con­text of the mul­ti­ple cur­rency sys­tem, mone­tary and liq­uid­ity de­vel­op­ments in the coun­try re­main closely linked to de­vel­op­ments on the bal­ance of pay­ments.

“The ex­ter­nal sec­tor is a crit­i­cal source of liq­uid­ity in the econ­omy and it is against this back­drop that the bank in­tro­duced the ex­port in­cen­tive scheme to boost the coun­try’s ex­port earn­ings, which have been a sig­nif­i­cant source of liq­uid­ity,” he said. — @okazunga

Dr John Man­gudya

Newspapers in English

Newspapers from Zimbabwe

© PressReader. All rights reserved.