Zim forex inflows surge 23pc over two months

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The RBZ says on an annual basis, broad money grew by 708,87 percent in December 2023, from $2,338 trillion in December 2022. The growth was largely driven by an increase of $12,824 trillion in foreign currency deposits

Mike Tome Business Reporter

Zimbabwe’s foreign currency receipts grew by 23 percent to US$2,2 billion between January and February this year from US$1,8 billion in the same period last year, with the central bank saying the economy’s capacity to generate forex remains robust.

Reserve Bank of Zimbabwe (RBZ) Governor, Dr John Mushayavanhu, in his inaugural monetary policy statement presented on Friday, said Zimbabwe’s foreign currency generation capacity had remained strong after US$11 billion was received in 2023, albeit slightly lower than the US$11,4 billion generated in 2022.

“The foreign currency receipts for January and February 2024 amounted to US$2,2 billion compared to US$1,8 billion received during the same period in 2023, representing a 23 percent increase,” Dr Mushayavanhu said.

The central bank chief noted the strong foreign currency performance supported the improved foreign currency deposits in the banking sector, foreign currency circulating in the economy, and overall aggregate demand.

In line with global trends, the country’s monetary and financial conditions have also remained tight with the local currency constituting just under 20 percent of the total money supply in the economy.

The country’s merchandise export earnings however fell by 0,8 percent to US$6,9 billion in 2023 from US$7 billion realised in 2022 predominantly weighed down by subdued mineral exports.

The mineral exports, which constitute about 80 percent of the country’s merchandise exports, declined by seven percent to US$5,2 billion from US$5,5 billion in 2022.

Platinum Group of Metals (PGMs) exports plunged owing to receding commodity prices on the global market.

Exports of PGMs witnessed a substantial decline of 36, 9 percent, to US$1, 4 billion in 2023 compared to US$2, 2 billion realised in 2022.

Albeit higher prices on the global market, gold exports were weighed down by volume decline caused by lower production during 2023.

Total gold deliveries to the Fidelity Gold Refinery (FGR) were 14,7 percent lower at 30,1 tonnes during 2023 compared to 35,3 tonnes delivered in 2022.

Gold exports are thus estimated to have declined by approximately 11 percent, from US$1 997,8 million in 2022 to US$1 784,2 million in 2023

However, lithium exports surged by 854, 7 percent to US$674 million in 2023 from US$70,6 million in 2022.

Notable production has already commenced at Bikita Minerals (Sinomine), Prospect Lithium Zimbabwe (formerly Acadia), Sabi Star (Maxi Mindi), Kuvimba (Sandawana), and Zulu Lithium.

However, the general decline in mineral exports was offset by agricultural and manufactured exports growth.

Agriculture exports paved 24,9 percent ahead of 2022 to close the year at US$1,3 billion, while manufactured etwxports increased by 19,1 percent to US$430,7 million.

Agriculture performance was buoyed mainly by the exceptional performance of tobacco, sugar, and crocodile hides.

Tobacco is the agriculture sector’s main export earner Tobacco exports increased by 27, 8 percent, reaching U$1 183,8 million in the period under review, compared to US$926,1 million in 2022 attributable to the good season during which the country produced a record high 297 million kilograms in 2023, compared to 211 million kilograms produced in 2022.

Refined sugar exports posted a substantial growth of 46,2 percent to US$28, 3 million in 2023, from US$19, 4 million in 2022.

On the other hand, manufacturing exports were spurred by the significant rise in tobacco cigarette exports and refined sugar.

The growth of sugar and cigarette exports was predominantly driven by improved access to foreign markets and the efforts of industry players in the respective sectors towards developing external markets.

“The decrease in mineral exports was predominantly caused by the continuous decline of key commodity prices, primarily influenced by the diminished global growth prospects.

“Notably, palladium and rhodium prices experienced sharp contractions during the period despite the stability of platinum prices, leading to a decreased export value for the platinum group of metals (PGMs),” said Dr Mushayavanhu.

The country also witnessed a 4,9 percent surge in Merchandise imports value to US$8,5 billion from US$8 131,8 million in 2022.

“Increased fuel, machinery, electricity, and grain imports drove the growth.

As the economy expands, its capacity to accommodate imports that support the production process,” said Dr Mushayavanhu.

There are growing calls to diversify export commodities and markets to bolster its export basket and reach of local products.

Gems, precious metals, and a host of other minerals constitute circa 80 percent of Zimbabwe’s export basket.

This leaves some of the country’s key sectors like manufacturing and services sharing the remaining six percent contribution to the country’s exports.

Source: Business Weekly