Country's future is bright:
RESERVE Bank of Zimbabwe (RBZ) Governor Dr John Mangudya says the economy has performed well under difficult circumstances and the future is bright, particularly following the announcement of a “dream” Cabinet, which is expected to steer the country to greater heights.
The central bank added that going forward, it will strive to ensure expenditures are moderated while at the same time hunting for more lines of credit, both from existing and new sources to power the economy.
This comes as the demand for foreign currency by industry continues to outstrip supply due to a surge in production levels following the opening of new companies. Dr Mangudya told The Sunday Mail Business last week that the economy has overcome most of its difficulties and it should be smooth-sailing going forward.
“I think we have done well under difficult circumstances and going forward, the outlook is positive.
“We have passed the hump. Expenditures ahead of elections are very high everywhere in the world and in our case, we have passed this hump.
“As the central bank, we will continue to solicit for more lines of credit from old and new sources to meet demand which is coming from too much expansion of the economy, hence, putting pressure on the demand for foreign currency.”
Dr Mangudya said fuel, cooking oil and wheat imports have drained the bulk of foreign currency in the country.
Bread consumption in the country has all along averaged one million loaves per day but the figure has soared to 1,3 million loaves. This has seen the bread sector demanding US$60 million in foreign currency every month to import wheat.
Currently, the country is contending with a shortage of wheat, which, however, does not threaten the continued availability of bread as measures to import have been put in place.
Fuel imports have also grown in the last few months, gobbling about US$640 million between January and August this year.
In the six months to June, the country consumed 752,4 million of fuel, representing a 24 percent jump from the same period last year. The country requires an average of US$80 million per month to import fuel, 60 percent of which is used in the manufacturing sector.
Exports have generated US$2,8 in the first five months of this year, compared to the same period last year, driven by gold, which jumped by an incredible 65 percent to 13,3 tonnes.
Mid-Term Monetary Policy Statement to unveil new growth strategies
New Finance and Economic Development Minister Professor Mthuli Ncube indicated last week after taking his oath of office that Dr Mangudya would present the Mid-Term Monetary Policy Statement before month-end.
The Mid-Term MPS is expected to announce a raft of measures that will chart economic growth going forward.
Dr Mangudya said tentatively, the MidTerm MPS would be presented in the last week of September.
Chief among the measures to be announced by the RBZ include strengthening the use of multiple currencies.
“We are looking at strengthening the multiple currency system in order to preserve value in public funds. This is very important as it brings confidence which is very important in the economy.
“Further, we will put more vigour and rigour on exports to generate more foreign currency for the country. There will be more measures in the Monetary Policy Statement,” said Dr Mangudya.
Ramping up exports is central to generating more foreign currency. By Thursday last week, parallel market rates for foreign currency spiked to about 100 percent mainly driven by the mismatch between demand and supply.
Dr Mangudya said there are three key factors that inform parallel market rates for foreign currency — demand and supply, confidence and a burgeoning economy. Many companies are demanding foreign currency and take long to have their applications for foreign payments approved by the RBZ, resulting in some of them turning to the parallel market.
However, the total value of foreign payments applications filed with the RBZ by manufacturers could not be established by the time of going to print.