Industry hails trade deficit slump
ONE of the major constrains that continue to frustrate the economy’s headway is the recurring negative balance of trade on an annual basis to which its effects have adversely cut across key sectors such as the fi nancial services whose capacity to settle foreign payments on time for priority product items have been dampened.
Th is has also taken a huge toll on industry, particularly the mining and pharmaceutical sectors which acquire a huge chunk of supplies for production outside the country hence foreign payment delays have left many companies counting loses.
Approximately US$6 billion annually is lost through acquisition of various import products in an economy that already uses an international trading currency for domestic transactions with just a little less than US$3 billion recovered through a narrow range of export products mainly from the primary sectors of mining and agricul- ture.
Authorities remain committed to curb the widening trade gap as shown by the imports management measures put in place, not only to protect local industry, but also to minimise foreign currency leakages.
The country has recently been facing delays in foreign payments to suppliers of commodities such as fuel and lubricants owing to foreign currency shortages biting most banks.
Th is week, the country’s statistic agency, ZIMSTAT released figures showing that the trade deficit has narrowed by close to US$1 billion amid high expectations from industrialists that the country will continue capping the deficit with steps already taken to cajole Government to further cushion local fi rms in the interim.
As at end of 2016, latest data shows a marginal increase in exports to US$2,83 billion from US$2,7 billion, while imports fell to US$5,21 billion from US$ billion the previous year.
Analysts, however, said the slight change in trade deficit figures was a welcome development at a time Government needed industry and other economic players to gain confidence in its policy interventions.
Last year, Government introduced import restrictions through Statutory Instrument 64 as a way of promoting local products and curbing the ever yawning trade imbalance with the rest of the world.
Confederation of Zimbabwe Industries (CZI) president, Mr Busisa Moyo told Business Post that the import restrictions put in place by Government played a major role in offsetting the trade deficit although more products still need to be scrapped from the Open General Import Licence to accommodate other product lines local industry is capable of producing.
Despite an improvement from US$3 billion, a trade deficit of around US$2,3 billion remains worrisome for a lean economy as this one, as it almost accounts for a fi ft h of Gross Domestic Product.
“The ministry of Industry initiatives to restrict imports through SI/18, 19, 20 and SI/64 of 2016 as well as SI 6 and 126 of 2014 are starting to pay off and we are in discussions with Government to increase the number of products that can be manufactured locally and substitute imports where it is clearly possible.
“We are also encouraging Parliament to enact Minimum Local Content Procurement rules for Government, private sector and the wholesale and retail
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