BULAWAYO – Zimbabwe’s foreign reserves have depleted to $200 million against a requirement of $1 billion cover as the country is struggling to emerge out of a near-recession, the Reserve Bank of Zimbabwe (RBZ) has said.
Jesimen Chipika, the central bank deputy governor, on Thursday told industrialists at the Confederation of Zimbabwe Industries (CZI) conference that the country’s virtual money, un-backed Real Time Gross Settlement (RTGS) balances, presently stood at $2,2 billion, a figure she said did not correspond with the $200 million reserves.
“We are looking at $1 billion foreign cover but have foreign reserves of $200 million, that is the economy we are trying to run… So as you can see, it is very unbalanced.
“We need the right measures around fiscal consolidation, wage bill rationalisation in the public sector, consolidating revenue collections, among other measures to ensure we do not lapse into recession,” Chipika said.
While Chipika said RTGS balances stood at $2,2 billion, RBZ data shows that RTGS transactions balances stood at $6,3 billion as at March 2018.
Zimbabwe is battling a biting cash shortage that has plagued the economy for the past two years without a solution in sight. As a result of the liquidity quagmire, the parallel cash market has thrived with premiums being attached to Zimbabwe’s anchor currency, the United States dollar.
The deputy RBZ boss highlighted that the country was not yet ready to revert to a local currency, as it was not generating enough foreign exchange to support a local currency at the moment.
“If we introduce the local currency we will go back to 2008 and we don’t want that… There is no way at this point that we will introduce a currency or even a soft currency. In the short term let us continue with our currency…
“In the medium term if we see economy getting stronger we can then get the local currency
“We have to deal with the confidence that has been destroyed. In the short term, let’s continue with the multi-currency,” the deputy governor said.
Chipika, who claimed the economy was on a rebound, said the RBZ anticipated the $1 billion needed for Zimbabwe to be able to have its own currency to come from various sources including Diaspora remittances.
“Something is happening economically in terms of growth… This is something we should be on the watch for to ensure we are prepared for the growth…
“We need $1 billion if we could ever have our own currency and the sources of the $1 billion include production, it can also come through Foreign Direct Investments, but mostly, our most viable option at this stage would be increased production,” the RBZ boss said.
“We need to have production of goods and services. There is a reason why we are where we are…
“The economy was sliding from 2011 to 2016. If we had not put in place expansionary measures the economy was going into recession, negative growth. Some of the measures rescued us,” she said.