Zimbabwe’s balance of payments position continues to strengthen, after surging 4,25 percent in 2020 compared to the same period last year on account of strong growth in exports.
Rarely, and until coming into being of the second republic, Zimbabwe had gotten used to perennial negative BoP positions, with imports far outstripping exports with astonishing regularity.
A positive balance of payments means that more money (specifically the elusive foreign currency) enters a country than leaves it, while a negative BOP indicates the opposite.
Figures in the 2021 monetary policy statement presented by Reserve Bank of Zimbabwe (RBZ) Governor John Mangudya last week showed that exports rose 5,8 percent to US$4,9 billion in 2020.
Dr Mangudya said export performance was driven by platinum group metals, which registered significant growth in palladium and rhodium prices. This was, however, partially offset by price fall in gold, tobacco, chrome and manufactured goods.
On the other hand, imports increased 5,1 percent during the same period to US$4,7 billion, from US$4,5 billion in 2019, despite sharp declines in electricity, fuel, raw materials, machinery, manufactured goods and vehicles.
“This was mainly due to the impact of Covid-19 restrictions domestically and externally. Food imports, however, increased by 204 percent, from US$194,3 million in 2019 to US$591 million in 2020,” Dr Mangudya said..
The increase in food imports was mainly accounted for by rice, maize and wheat. Dr Mangudya said maize imports increased sharply from US$26,7 million in 2019 to US$297,8 million in 2020, due to consecutive droughts.
The central bank chief said the services sector was adversely affected by the Covid-19 pandemic in the year under review, with both exports and imports well below pre-pandemic levels.
Services exports contracted from US$603 million achieved in 2019 to US$331 million last year, owing to a sharp contraction in travel, subdued transport and other business service exports.
“The containment measures imposed by Government in response to the Covid-19 pandemic limited movement of people into and out of the country,” the central bank governor noted.
Similarly, services imports declined by 15,3 percent, from US$909 million in 2019 to US$769 million last year owing to the Covid-19 disruptions, which affected global supply chains and trade.
Dr Mangudya said Zimbabwe’s current account was projected to remain in surplus position this year, albeit at a somewhat reduced margin, as improved foreign investment and other capital inflows shore up imports.