Source: Export trend in right direction – Mangudya | The Financial Gazette August 31, 2017
Reserve Bank of Zimbabwe governor, John Mangudya
THE central bank says Zimbabwe’s exports, which rose 15 percent in the six months to June to reach $2 billion, showed the country was in the right path towards eliminating its trade deficit.
Zimbabwe is battling to bridge a huge trade gap, which has resulted in a foreign currency crisis, which intensified early last year.
Reserve Bank of Zimbabwe governor John Mangudya said the increase in exports was driven mainly by minerals and tobacco. The country recorded a $1,2 billion trade deficit in the first seven months of 2017, lower than the $1,34 billion deficit registered in the same period of 2016.
Government imposed import restrictions on several goods and products last year, while the central bank launched a $200 million export incentive scheme.
“We are in the right direction as a country. Between January and June this year, exports reached $2 billion while last year during the same period, exports were $1,8 billion. That’s a lot of money,” Mangudya told The Financial Gazette.
Zimbabwe will soon issue an additional $300 million worth of bond notes to support an export incentive scheme which was secured from Cairo-headquartered lender African Export and Import Bank.
The new facility will be in addition to the $200 million facility for bond notes made available by the same financial institution last year.
Mangudya said the bond notes would be released into the market on a “drip-feed basis” to contain inflation and reduce cash leakages.
A total of about $175 million had been paid out under the export incentive scheme in the form of bond notes against a payable amount of $188 million, he said.
He added that the need to increase exports requires that the country continuously develops strategies to support exporting entities.
Zimbabwe introduced a multi-currency regime in 2009 after abandoning its own currency to escape hyperinflation.
But a serious shortage of foreign currency resulted in the country facing a severe liquidity crisis that caused President Robert Mugabe’s administration to introduce bond notes in November. Bond coins worth $25 million have been released into circulation alongside bond notes, bringing the total amount of bond currency to $200 million.
But these have failed to meet the demand for cash in the economy.
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