Zimbabwe has been experiencing significant net foreign currency outflows since the quarter ending September 2020, official data from the central bank show.
While the country has been recording more outflows than inflows since the quarter ending June 2019, the gap was narrow and was almost non-existent for the quarter ending June 2020.
However, since then, outflows through the SWIFT system have been growing at a faster pace than inflows, according to the National Payment Systems first quarter to March 2021 activity report.
The quarter under review was worse off with the gap between SWIFT inflows and outflows widening to U$274.36 million, a 68 percent increase from the previous quarter.
This is after both inflows and outflows dropped, but with the former dropping sharply to the lowest quarterly level since the quarter ending June 2020.
SWIFT foreign currency receipts decreased by 16 percent to US$860 million for the quarter ending 31 March 2021 from US$1.04 billion in the previous quarter ending 31 December 2020. During the same period, SWIFT foreign currency payments decreased by just 5 percent to US$1.14 billion from US$1.20 billion.
This resulted in the net foreign currency outflows increasing “by 68 percent to US$274.36 million in the quarter ending 31 March 2021 from US$162.95 million recorded in the previous Quarter”.
If this trend continued into the current quarter, it could explain the ongoing excruciating foreign currency shortage in the market which has resulted in a weakening local currency as reflected by the wide disparity between the official and parallel market exchange rate.
Former RBZ’s Monetary Policy Member Eddie Cross, also claimed, on Zimpapers Television Network, that the foreign currency backlog is now more than US$100 million.
The reduced quarterly inflows can be blamed on the lockdown measures imposed across several countries including Zimbabwe following the second wave of the coronavirus pandemic.
The period also saw reduced exports of key exports such as gold.
Zimbabwe’s gold production fell 30 percent to 3.98 tonnes in the first quarter of this year, while export earnings from the yellow metal also declined.
The country earned just earned US$200 million from gold exports in the January-March quarter.
In the previous quarter to December 2020, gold exports amounted to US$268.4 million.
But while inflows were falling sharply, the country still experienced high levels of foreign payments with significant amounts earmarked for the importation of raw materials, including maize.
With the demand for foreign currency remaining elevated on both the official and parallel market, authorities promulgated Statutory Instrument 127 of 2021.
According to the central bank, the purpose of SI 127 is to ensure that those obtaining foreign exchange from the auction system do not use parallel market rates in pricing their products.
Through its Twitter handle the RBZ said: “The use of parallel exchange rates of above 100, for example, on funds obtained from the auction at $85 to US$1 is not good for the economy and consumers.
“It is these anomalies or arbitrage opportunities that the S.I is designed to deal with.
“The S.I is not designed to harm business but to provide a level playing field for business and to protect consumers.”
Business, through the Confederation of Zimbabwe Industries, (as we report elsewhere in this publication) has however recommended that SI 127 be set aside.