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Farirai Machivenyika Senior Reporter
More than US$3,4 billion has been allotted at the Reserve Bank of Zimbabwe (RBZ)’s foreign currency auction system since its inception in mid-2020, with the productive sector getting the bulk of the money.
In its mid-term Monetary Policy Statement prepared last week, the RBZ said: “A total amount of US$3,4 billion had been allotted at the auctions as at 26 July 2022, with US$2,93 billion having been allotted at the main auction and US$498,07 million at the SMEs auction.
“The productive sectors of the economy continue to receive most of the funds allotted at foreign currency auctions, with more than 65 percent of the allotments going towards supporting those sectors. As at 26 July 2022, 41 percent of the total allotments financed raw materials, whilst 22 percent funded capital goods such as plant, machinery and equipment with 3 percent being allocated to fuel, electricity and gas.”
Since the introduction of the auction system, the RBZ has successfully held 104 main and 98 SME auctions, as of July 26, 2022.
This year, the auctions have allocated over US$834,7 million, representing about 91 percent of the total bids submitted to the auction as of July 26 with the SMEs taking 17 percent in the first half of 2022, compared to a share of 11 percent in the same period in 2021.
“The average number of bids per auction was about 1 450 per week during the first half of 2022, lower than the average of 2 000 bids per week in the fourth quarter of 2021,” the RBZ said.
“The reduction in the number of bids is attributable to the introduction of the willing-buyer willing-seller foreign exchange trading mechanism, with some applicants who used to rely on the foreign exchange auction system now accessing foreign currency through that system, and effective monitoring by banks and exchange control authorities.”
The RBZ said it had cleared most of the backlog between allotment and the actual transfer of the funds and was in the process of settling the ring-fenced backlog of US$169 million from the main auction that arose some time ago.
International remittances comprise transfers by Zimbabweans in the diaspora and from international organisations and these are the second most important inflow after exports.
With a small trade imbalance it is these remittances that create the positive inflows into the economy.
As at 30 June 2022, total international remittances amounted to US$1,372 billion, an increase of 23 percent from the US$1,113 billion recorded during the same period in 2021.
“Of the total amount, diaspora remittances amounted to US$797 million, a 23 percent increase from US$650 million received during the same period in 2021,” the RBZ said.
“International remittances received through the normal banking system on behalf of international organisations amounted to US$575 million, an increase of 24 percent from US$463 million recorded during the same period in 2021.”
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