Harare – Zimbabwe continues to suffer from low gold output with the declining trend first noted in the fourth quarter of 2018 now extending into 2019. The sustained decline in the country’s largest forex earner, threat to further destabilise both national production and the external trade position aggregates which are key in achieving a stable fiscus and monetary position. Latest figures by Fidelity Printers which is the sole buyer of gold on behalf of government reporting that January deliveries came in at 1.7 tones which is at par with the average gold deliveries in the last 3 months period of the year For perspective, gold production averaged 2.8 tones a month through 2018 which is 65% ahead of January outturn. Before the demise in the final quarter of 2018 production averaged a higher 3.1 tones between January and September. The decline in deliveries interestingly coincided with the worsening exchange rate starting from October 2018. The demise in the local currency followed the separation of nostros, which the market correctly read to imply an admittance on the inequivalence between the local currency and the USD. This was coupled with the introduction of a 2% money transfer tax as a precursor to austerity. What was to emerge was battering of the local equivalence as Zimbabwe rushed to dispose of their bank balances either through goods and services or buying of forex. Miners however were inhibited by the 1:1 legislation given that they could access only 15% of their foreign sales receipts in hard currency out of the 75% stipulated by the RBZ. At this rate it meant over 50% of their value was eroded in real terms in line with the tumbling exchange rate. In that very same month of October, production came off by almost half at 43% and was keep falling in 2 more successive months. Production could however not fall this fast within the stipulated time frame unless a real market shock was realized. Miners largely small scale, could possibly have immediately diverted their produce to outside markets notably in South Africa and Mozambique. There is also a possibility that the deliveries were attracting foreign stocks. For large scale miners the decline in production was moderate, although there were possibilities of understating of production or withholding stocks. Some miners in protest even went on to shut down some of their mines citing viability. Government only revised the retention ratio to 55% late into the year after some miners alleged that they were only accessing 15% of the promised 75%, however as latest figures show, the sector is not impressed. Gold is Zimbabwe’s largest forex earner racking in 28% of foreign receipts to $1.2 billion dollars in 2018 coming from a billion dollars in 2017. Failure to bring finality to the currency matter is likely to result in further loss in production and expected earnings. Government expects to achieve 40 tones in 2019, which if attained will be higher than that achieved since 2009. Equity Axis News