A STRONG rebound in Zimbabwe’s exports has given impetus to efforts to achieve 7,8% gross domestic product growth this year, Reserve Bank of Zimbabwe (RBZ) governor John Mangudya said on Friday, noting that the battle to control inflation was gaining traction.
Government last month reviewed the growth target to 7,8%, from the 7,4% announced in November, saying spin-offs from improved access to foreign currency and a rebound in mineral exports would inspire a stronger rebound than previously projected.
The RBZ governor, who spoke during an exciting mid-term monetary policy statement (MPS) review organised by the Zimbabwe Independent, said growth stimulating policies rolled out in the past year had laid the foundation for currency stability, one of the biggest headaches confronting the country.
He allayed fears that after battling to allot foreign currency to companies on time, the forex currency auction system had failed.
But business leaders called upon the central bank chief to make auction system weaknesses his top priority to help companies import critical goods.
“We have grown by 29% in terms of exports,”
the RBZ boss said during the discussion.
He said foreign currency availability had been boosted by the auction system, which raised US$1,7 billion within its first year of operation.
“The coverage ratio is higher under the auction than through foreign currency accounts, than through the interbank market. The economy is on the move, we are on the right track to recovery,”
he said, noting that companies had found respite in the auction system established in June last year.
“We, therefore, need to focus on controlling inflation, in taming inflation, so that at the end of the day the preference (of foreign currency) is reduced because the value of the local currency would have gone up,”
the central bank chief noted.
The MPS released last month predicted merchandise exports to rise by 4,2% to US$5,1 billion this year, from US$4,9 billion in 2020, boosted by stronger performance in the mining sector among others.
Platinum group of metals and recovery in chrome and high-carbon ferrochrome exports, as well as gold are projected to underpin the rebound.
Zimbabwe National Chamber of Commerce chief executive Christopher Mugaga called on the RBZ to deal with the backlog affecting the auction system.
“We have seen a backlog, personally I don’t know the amount but we have seen figures of US$200 million plus being thrown on the market in terms of the backlog on the forex auction.
“But what’s worrisome maybe you will correct us on this, you will see then the allocated amount moving sometimes to US$45 million per week,” he said.
“The question for us is: why would you, somehow, auction money which is not available? We are struggling on the auction right now.
“There are places with a backlog which possibly can maybe be put to eight weeks plus. This is worry on its own.
Confederation of Zimbabwe Industries CEO, Sekai Kuvarika said while stability had returned, the country should work hard to ensure that this stability is sustainable, with the auction system playing its price discovery role.