Imports declined by 14% in the first half of the year to $2,5 billion on the back of measures by government to restrict the importation of non-essential products.
BY TATIRA ZWINOIRA
However, despite registering a drop, imports figures still remain double that of exports, which totalled $1,124bn during the same period. The drop in imports is from a previous figure of $2,9bn recorded last year.
In his mid-term fiscal policy review last week, Finance minister Patrick Chinamasa said the decline in imports was triggered by the Reserve Bank of Zimbabwe’s foreign exchange currency priority list as well as a number of statutory instruments restricting imports
“The decline in imports is also beginning to benefit from a combination of the priority list put in place by the Reserve Bank in May 2016 to ensure effective utilisation of foreign exchange and the recently gazetted statutory instruments, which removed goods that are locally available from open general import licence exemption,” he said.
“The still relatively high import level have also meant a high current account deficit, which is estimated at $2,5bn during the first half of the year, and constituting 12% of the gross domestic product. This represents a significant and unsustainable outflow of liquidity from the domestic economy.”
Chinamasa said exports had declined by 9% from $1,232bn recorded in 2015.
A current account deficit occurs when the value of imports of goods, services and investment incomes is greater than exports.
The trade deficit is part of the current account deficit, which was about $1, 371bn for the first half of the year.
Exports declined during the first half of the year due to the drought-induced contraction in agriculture, declining global mineral prices, and weakening of regional and other trading partner currencies.
Other reasons attributed to the decline were a suppressed capacity utilisation in the manufacturing sector and lack of affordable external lines of credit.
Imports remain high due to affordability of buying goods from outside the country regionally and the quality of goods.
Exports contribute over 60% in liquidity flows into the country. Low exports mean continued cash shortages going into the future, at a time when revenue flows to government are low.
“Diaspora remittances, which are a major source of liquidity, declined by 15% in the first half of the year, mainly as a result of rapid currency depreciation in source markets against the US dollar,” Chinamasa said.
“During the first six months of 2016, Diaspora remittances amounted to $387,9m, compared to $457,8m received during the corresponding period in 2015.”
He said there was need to speed up the implementation of the National Diaspora Policy to increase liquidity flows.
Government introduced SI6 and 126 of 2014, SI18, 19, 20 and 64 of 2016, which all restricted imports into the country.