FOREX inflows reached a hefty US$11,6 billion last year, official data shows, as central bank chief John Mangudya disclosed last week that this was Zimbabwe’s biggest windfall since independency, 42 years ago.
Last week Thursday’s data could refresh growing worries that while there have been robust surges in exports, hard currency deployments to liquidity and power-starved industries have been dismally lacking.
In the aftermath, gross domestic product growth has suffered under drastic production cuts, precipitating a job market bloodbath among a sea of painful outcomes.
In the latest monetary policy statement (MPS), the central bank chief was shy to explore this vexing dislocations that has courted his personal attention.
But rioting black market rates mounted during the final quarter of 2022, signalling little resolve to tackle a hurdle that has tormented markets for 23 years.
Central bank paperwork, as seen in Thursday’s MPS, is reassuring and solid — 65% of banking sector deposits ended the year swimming in forex.
Only 35% was held in the free-falling Zimbabwe dollar pool.
And 64% of bank loans and advances were injected into markets in United States dollars, the central bank chief said.
- Teachers, other civil servants face off
- Veld fire management strategies for 2022
- Magistrate in court for abuse of power
- Vungu Dam water treatment and irrigation project takes off
Keep Reading
Diaspora remittances — the money sent home through formal channels by millions who have fled 23 years of protracted mayhem — rose by 14% to US$1,66 billion compared to 2021.
Yet on a damaging black market that authorities have failed to contain, demand for US dollars rocketed, edging close to US$1:$1 200 in December, compared to US$1:$750 in September.
“It shows that there were still hard dollar shortages in the market, which authorities must address,” said Tapiwa Sibanda, head of strategy at Trade Winds.
The 2022 forex windfall could escalate confrontations between labour and its Tripartite Negotiation Forum partners — government and business — over a deadlocked US$150 minimum wage.
Perhaps it is time the warring parties relook at what makes up industries’ toplines and the profile of the currencies that end up in State coffers, as recorded by central bank, which also announced Thursday that it would be tabulating inflation through a hybrid system.
Mangudya said this had been informed by the robust surge in United State dollar inflows, and an aggressive gallop towards full scale dollarisation.
“It is essential that domestic inflation reflects the significant foreign currency inflows in the economy by adopting the blended inflation as the country’s reference inflation and to reflect the dual currency structure,” Mangudya said.
“Total forex receipts at US$11,6 billion in 2022 were the highest FX (foreign currency) inflows ever received in the country. Total forex receipts stood at US$11,6 billion against payments of US$8,6 billion. About 70% of domestic expenditure is in US dollars and foreign currency deposits and loans constitute about 65% of total banking sector deposits,” the RBZ chief noted.
“Total banking deposits were $2,29 trillion as of 31 December 2022, being 65% FX deposits and 35% Zimbabwe dollar deposits.
“Total banking sector loans and advances were $1,29 trillion, being 64% FX and 36% Zimbabwe dollars,” the central bank governor noted.
RBZ will be continuing with its highly successful mop-up operation, which had drained about $9 billion by the end of third quarter 2022, but it could mean an escalation of pain for millions, and ailing industries.
