RBZ forex auction disburses US$2,8bn to key sectors
The Reserve Bank of Zimbabwe (RBZ) says it has allotted a cumulative US$2,8 billion to various key sectors of the economy since inception of the weekly foreign currency auction system in June 2020.
The funding has gone towards importation of key raw materials, products, raw materials and equipment required to keep the economy functioning properly.
The foreign currency disbursements have helped local industry to increase capacity from 47 percent in 2021 to 61 percent last year. This has increased locally made goods on supermarket shelves while cutting country’s to import bills.
It also means Zimbabwe saved hundreds of millions of US dollars through increased domestic production, helping to preserve and grow local employment instead of export jobs by buying from other countries.
Monetary authorities introduced the auction system nearly two years ago amid turmoil in the market, with prices and exchange rate volatility wrecking havoc due to absence of a market determined exchange rate.
Since the introduction of the auction system, inflation has trended down from a post dollarisation record of 837,5 percent to 56 percent in July last year.
“The total foreign exchange auction allotments for January and February 2022 is US$218,35 million bringing the cumulative allotments since inception of the Foreign Exchange Auction System to US$2,8 billion,” RBZ Governor Dr John Mangudya said in a statement.
Dr Mangudya said the bulk of the funds allotted to various entities in February 2022, 64 percent went towards raw material imports valued at US$54 million and machinery and equipment worth US$39 million.
The balance was allocated towards payment for consumables at US$17 million, services US$11 million, retail and distribution US$15 million, pharmaceuticals and chemicals US$6,7 million, packaging US$3,8 million and fuel, electricity and gas US$204 million.
He also said between January and February 2022, a total of US$218 million was disbursed to various companies through the auction system, as demand continues to firm.
The RBZ foreign currency auction was temporarily closed for the festive season from December 14, 2021 and resumed on January 20, 2022 with a total US$30 million allotted on the return date.
Dr Mangudya, in a foreign exchange payments update for the period January to February, said US$120 million was allotted under the main foreign exchange auction while US$28 million was allotted under the SMEs auction.
The Governor said the total foreign exchange payments for the first two months of 2022, by source amounting to US$1,16 billion, came from foreign currency accounts US$925 million, foreign exchange auction US$218 million and the interbank market US$16 million.
The bank’s monetary policy committee recently urged the bank to clear the foreign exchange auction backlog by the end of March 2022 and ensure that going forward the allotted funds will be equivalent to foreign exchange available during each week of the auction.
The RBZ said it had since cleared the nearly US$200 million ring-fenced foreign currency backlog on the auction system and was now working to ensure it is current on all allotted fresh bids.
The backlog accumulated from bids allotted on the auction but which the bank could not fund due to forex shortage, which negatively affected beneficiary entities.
But according to Dr Mangudya, there had been “a lot of progress” on efforts to clear all the allotted outstanding bids on the bank’s weekly auction system.
The backlog, he said, was also attributable to malpractices by certain entities that weresponsoring multiple bids under the auction system.-The Herald
