US$2.12 billion allotted on the auction system from June 2020 – Sept 2021

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Reserve Bank of Zimbabwe Governor, Dr John Mangudya
  • Raw Materials get 40% of the allotments
  • US$1.85 billion allotted to the main auction system
  • US$267.39 million allotted to SME auction
  • US$4.92 billion foreign payments made for the period January 2021 to September 2021

Harare – The Reserve Bank of Zimbabwe has allotted a total of US$2.12 billion on the foreign exchange auction system from its introduction in June last year to September 2021 with the bulk of it tuned towards raw materials for both the SME and main auction.

In a press statement, the Central bank’s Governor, John Mangudya said the main foreign exchange auction has 1 822 beneficiaries of US$1.85 billion allotted during the period under review while the SME auction has 4 136 beneficiaries of US$267.39 million.

40% of the total allotted amount representing US$857.56 million went towards the purchase of raw materials with US$790.78 million and US$66.77 million allotted to the main and SME auction respectively.

“The auction system remains the most diversified source of foreign exchange with more than 5  958  entities having accessed foreign currency through the  Main  Auction and the  SMEs Auction.

“The bulk of the allotted funds (60%) has gone towards payment for raw materials (US$857.6 million) and machinery and equipment (US$421.7 million) and the residual 40% going towards payment for consumables, pharmaceuticals and other critical needs of the economy as reflected in the tables below,” Mangudya said.

Fuel, electricity and gas, and paper and packaging got the lowest allotments on both the main and SME foreign exchange auction system as they got 5% and 2% respectively.

Mangudya added that for the period January 2021 to September 2021, a total amount of US$4.92 billion foreign payments were made to foreign currency accounts, interbank market payments, and foreign currency auction allotments.

“A Schedule showing the total foreign exchange payments by source for the period January  2021 to September 2021 amounting to US$4 928 568  047 broken down as follows: – foreign currency accounts (US$3 151 356 235), interbank market (US$275 670 287) and the Foreign Exchange Auction System (US$1 501 541 525),” he added.

Meanwhile, the auction system has been experiencing a lot of backlogs of foreign currency allotments which Mangudya attributed to malpractices by certain entities that were sponsoring multiple bids under the auction system. As of August 30, 2021, the RBZ said the backlog was US$175 million and vowed to clear it by the end of September.

Recently, the government released US$70 million to clear the backlog and speed up the disbursement of funding and Mangudya highlighted that all auction allotments would be paid within two weeks from the auction date.

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