Foreign currency receipts up 13.9 %, but shortages still biting the economy


    Harare – The RBZ has revealed that the global foreign currency for the period January to December 2018 amounted to US$6.3 billion compared to US$5.5 billion received during the same period in 2017, representing a 13.9 percent increase in foreign currency supply.

    Export proceeds continued to be the major source of liquidity for the country contributing 68 percent of the total global receipts for the fifty-two weeks of 2018, while international money transfers accounted for about 17 percent.

    International remittances declined by 19 percent from US$1.4 billion received in 2017 to US$1.1 billion received in 2018.

    Of the US$1.4 billion, Diaspora remittances contributed US$619, 2 million, a decline of 11.4 percent as compared to US$699 million received in 2017.

    The decline of diaspora remittances is mainly attributed to the preference to send in-kind, remittances by the Diaspora, and the interception of remittances in South Africa by cross border traders. South Africa contributes about 34 percent of the total Diaspora remittances.

    However, despite the 13.9 percent increase in foreign currency supply the country is failing to meet its foreign currency obligations with the local market shrinking severely due to the disparities between the RTGS and the United States dollar, a situation which needs to be addressed as local market is vital to business survival.

    The country is experiencing forex shortages because imports demand in Zimbabwe far outstrips exports receipts even as money supply is growing.

    Many companies reported that they are not accessing foreign currency for the procurement of their raw materials and to service their outstanding liabilities with creditors.

    Now creditors have no choice but to limit further support until such a time companies make significant inroads into the repayment of the outstanding liabilities.

    Some companies closed operations. Examples are Surface Wilmar, manufacturers of Pure drop cooking oil which closed operations after failing to service a debt in the region of $11 million owed to its foreign raw material suppliers. Capri Zimbabwe has been closed since November 2018 and had to shed 400 of its workers.

    More recently, money transfer agencies have closed shop due to failure to access foreign currency from the banks and have been unable to complete the transaction with the receiver of the funds.

    Some Western Union agencies have been putting up notices advising beneficiaries of remittances that they no longer offer such services.

    Moreover, foreign investors in Zimbabwean equities have struggled to repatriate dividends or move their money out in recent years because of the dollar squeeze.

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