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Golden Sibanda Senior Business Reporter
Zimbabwe’s balance of payment (BoP) position is projected to remain positive after the country registered strong growth in international remittances in the first half of this year.
A positive outlook augurs well for the country’s capacity to meet its foreign obligations, more so against the backdrop of challenges presented by the Covid-19 pandemic and given the foreign exchange pressures that Zimbabwe is facing.
There has also been limited demand for foreign currency as most borders remained closed for private visits except for transporters of commercial cargo.
This is also a critical issue if viewed from the perspective that Zimbabwe is currently heavily dependent on imports due to constrained capacity across most of its productive sectors, which gives rise to imported inflation from exchange rate dynamics.
Figures in the Reserve Bank mid-term monetary policy statement, show that total foreign currency receipts for the half year to June 30, 2020 amounted to US$3,16 billion, of which US$1.96 billion were export proceeds.
This followed an increase of 17,4 percent in total foreign currency receipts in the first quarter of 2020, mainly driven by the increase in international remittances, draw-downs on lines of credit and increase in exports.
During the lockdown period, the country’s key economic sectors such as mining remained open, but operating under strict regulations monitored by the Ministry of Health and Childcare officials.
From January to June 2020, foreign payments reported by authorised dealers amounted to $1,84 billion.
This represents a 5,9 percent decrease from $1,96 billion recorded during the same period in 2019. As such, the mining and agriculture sectors registered fair increase of 24 percent and 58 percent, respectively in foreign payments made relative to the previous year’s.
“Reflecting favourable foreign currency performance during the first half of the year, albeit under a harsh operating environment, the country’s balance of payments is projected to remain favourable, driven by improvements in exports and diaspora remittances,” the RBZ said.
The balance of payments (BoP), also known as balance of international payments, is summary of all transactions that a country’s individuals, companies, and government bodies complete with individuals, companies, and government bodies outside the country.
These transactions consist of imports and exports of goods, services, and capital, as well as transfer payments, such as foreign aid and remittances.
As at June 30, 2020, total international remittances amounted to US$705 million, representing a 26 percent increase from 2019’s comparative figure of US$558 million during the same period.
Of the total amount, diaspora remittances amounted to US$374 million, a 25 percent increase from US$298 million received during the same period in 2019.
International remittances received through the normal banking system on behalf of international organisations (NGOs) amounted to US$331 million, a 27 percent increase from previous year of US$260 million.
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