Forex earnings poised to hit record high

ZIMBABWE’S foreign currency earnings are poised to hit record high since 2010, spurred by mineral exports and diaspora remittances, the Reserve Bank of Zimbabwe said.

As of October 2021, the country had recorded a total of US$7,2 billion in foreign currency receipts resulting in a positive current account balance of around $1,7 billion.

Export earnings increased 54,5 percent to US$4,5 billion from exports between January and mid-October, from US$2,9 billion realised in 2020, according to the central bank. Mining exports generates about 85 percent of the country’s foreign currency earnings.

“International remittances, encompassing diaspora remittances and Non-Governmental Organisations funds jumped to US$1,7 billion from US$1,1 billion,” RBZ said.

Loan proceeds rose to US$728 million from US$673 million.

Addressing delegates at a conference held in Victoria Falls recently Deputy central bank governor Kupukile Mlambo acknowledged that this year’s external sector’s performance was inspiring and could reach the highest in nearly a decade.

“As of now we are standing at US$7,145 billion in terms of foreign currency inflows if you compare that to outflows that have taken place since January which is about US$5 billion in terms of foreign currency payments outside, we are sitting on about $1, 7 billion. Therefore, we expect that this year we are going to get the highest foreign currency inflows since 2010, meaning we are on a growth trajectory.

“The external factor is doing very well, we are expecting a positive current account balance, driven mainly by a recovery in the global economy, performance, diaspora remittances, and moderation of inflows,” said Dr Mlambo.

He indicated that he was confounded by an increase in parallel market exchange rates given the amount of foreign currency in the country’s coffers.

“We are in a good situation, it puzzles me sometimes when the black market rate is behaving the way it is, because it is evident that it is something else, that are not fundamentals,” said Dr Mlambo.

Dr Mlambo attributed the relatively stable economic conditions witnessed in 2021 to favourable climatic conditions which spurred the agriculture sector performance and worthy policy framework which was crafted during the year.

Critically, he pointed that the two inputs (favourable climatic conditions and policy framework) had been complementary in attaining better economic conditions compared to the two previous years.

“You can have good rains, but if you have bad policies it does not help, so major contributor that sustained economic progress in the country in 2021 was the policy environment that we are creating and the policies that we have introduced,” he added.