THE Confederation of Zimbabwe Industries (CZI) has said the central bank will be releasing foreign exchange under the $600 million nostro stabilisation facility on a weekly basis, which is expected to clear foreign payments backlog.The facility was announced in August and is guaranteed by Afreximbank.
BY TATIRA ZWINOIRA
In an interview on Tuesday, CZI president Sifelani Jabangwe said his body had been working with government to deal with the foreign payments delays.
“We have been discussing with the Reserve Bank of Zimbabwe (RBZ) and they are not injecting the whole $600 million. They are actually introducing it on a weekly and monthly basis. Yes, it is not the same as tobacco so there will be a bit of a shortage in the market, which is why we are seeing the rate on the black market starting to run. So what the nostro stabilisation facility will do is reduce the impact of that (black market running) but we will feel the pain again next year when the tobacco auction floors close,” he said.
Jabangwe said the rise in premiums on the parallel market was as a result of the tobacco season closing, which was very normal around this time if one looked at previous years.
“So the worry could be there because of past experiences but I do not think there is money in this economy to buy at the rate at which it keeps running. We do not have that much money because remember there is money that chases the forex which is your local money, the bond notes and RTGS [Real Time Gross Settlement], there isn’t enough money for it to run to the levels that we saw in the past,” Jabangwe said.
“…so we believe that yes there will be pain, but what we are trying to do is to monitor in the economy where the pains are. Last time, there was a little bit of an issue with fuel so these are the issues that need to be addressed.”
This week, the RBZ began drawing down on the nostro facility to deal with the foreign payment delays being experienced by manufacturers.
However, with the foreign currency backlog being reportedly about $570 million, it will consume nearly the whole nostro stabilisation facility.
As such, the central bank’s move to release the cash in batches is what some analysts are saying will ensure the cash is used to service manufacturers with their foreign payments and not the parallel market.
Jabangwe said the long term solution to the foreign exchange crisis was for companies to export to generate foreign currency.
“They (manufacturers) could generate their own currency and bring in materials because the good thing is that the exports for this year are actually increasing. The average exports have gone up to about $287 million a month from $180 million a month so there is a need to export more because we do not print currency so there is a need to export more,” he said.
Companies have warned that the forex crisis was threatening their businesses, with foreign suppliers demanding cash upfront or threatening to cancel supplies as the economy struggle to process foreign payments. Last year, the central bank came up with an import priority list for the efficient allocation of the scarce foreign exchange. Despite that, some products that enjoy top priority have failed to access the forex.