HARARE – The foreign currency situation will continue to be dire until the beginning of the tobacco selling season, a senior Reserve Bank of Zimbabwe (RBZ) official has said.
William Manhimanzi, the apex bank’s deputy director of financial markets, told tourism operators in Harare last week that the foreign currency crisis will not go away in haste, without dealing with the market fundamentals.
He said for now the apex bank was pinning its hopes on foreign currency receipts from the sale of tobacco around April this year.
“We are in problems that we are in now because the country is not generating sufficient foreign currency. It’s a fact (that) we can’t run away from,” said Manhimanzi.
He said the country’s foreign currency trends were seasonal in nature whereupon pressure builds-up in the last quarter and subsides during the tobacco-selling season.
Tobacco is the country’s single largest foreign currency earner.
In 2016, the golden leaf, as tobacco is commonly known, earned the country $771,8 million.
As at November 22, 2017, the crop had earned $827,4 million, an increase of seven percent from the previous year’s figures
China remains the top destination for Zimbabwe’s tobacco. Due to the country’s poor foreign currency generating capacity, the banking sector cannot keep up with foreign payments.
Foreign airlines have already raised alarm over the huge backlog of unremitted ticket payments.
At least $60 million in foreign airlines payments is stuck in the local banking sector with some global airlines warning they may be forced to suspend flights into Zimbabwe.
Manhimanzi said when the country gets to the last quarter of the year, its foreign currency dries up because of its seasonal nature.
“Most of our foreign currency peaks between March and August when we have the tobacco selling season and thereafter it kind of dips. So I don’t want to sit here and lie to you that things are going to immediately improve in the first quarter of the year; they are not,” he said.
“When the tobacco selling season begins at the end of March, obviously our foreign currency position will improve and we hope to push outstanding payments. I am not saying we are going to clear all the outstanding payments — that will be misinformation. We will push all the outstanding payments as much as we can,” he added.
Zimbabwe’s liquidity crisis is attributed to the collapse of its productive sector which is not generating sufficient foreign receipts required to meet its imports.
This has resulted in a serious mismatch between imports and exports with the end result being a crippling liquidity crisis.
Importers are being forced to access expensive foreign currency on the black market because there is a long queue of payments in the formal banking system waiting to be processed, resulting in a spike in prices.
A critical constituency affected by the foreign currency crisis are municipalities which are battling to pay for imported chemicals.