Reserve Bank of Zimbabwe (RBZ) governor John Mangudya has said Zimbabwe is spending more resources on consumption instead of capital projects.
BY TAFADZWA MUTACHA
Speaking at the launch of the Homelink’s housing project in Bindura on Wednesday, Mangudya said investment in capital projects stimulate development.
“When we spend more money on capital projects, that is what we call development, when you spend more money on consumption, it’s a consumptive economy and this is what we are going through as a country today,” he said.
“We spend more money on consumption as opposed on development and consumption increases demand for money.”
Recurrent expenditure, in the form of salaries, is chewing the bulk of the budget leaving little to capital projects.
Mangudya said there was need to preserve foreign currency to promote growth of industries.
“We need good exporting companies to get adequate foreign currency. We are exporting less goods than we are importing. Foreign currency is needed to purchase that which we would’ve imported taking money from the nostro account to buy fuel, raw materials other and products so its double-dipping from the same pot and these are the challenges that we are facing as a country,” he said.
Homelink, a subsidiary of the central bank, was set up in 2005 to harness foreign currency from Zimbabweans living in the Disapora.