THE country’s economy is currently operating at far less than its potential as it is functioning at around 80%, central bank governor Gideon Gono said this week.
Gono made the revelation this week after holding a meeting with government and fuel industry officials on the shortages of the commodity.
Fuel importing firms had blamed the fuel shortages on the availability of foreign currency.
“The economy is operating at between 70 and 80% and we have been availing foreign currency of at least $34 million every month,” Gono said.
“The issue here (fuel shortages) is beyond forex. We need to be more serious in the manner we do things because gone are the days when we had to blame everything on foreign currency shortages.”
Gono said that due to the unreliability of many of the fuel-importing firms, it was now necessary that a thorough audit be carried out on how the firms had used forex availed to them.
“Most of them (registered fuel firms) have no fixed abode. We are now looking for them and we have agreed with the ministry to investigate oil sector participants,” he said.
“We are not saying we are out of the woods yet in terms of foreign currency in the country but we have to be realistic.”
Gono said those found to have abused the fuel allocation would be prosecuted under the Exchange Control Regulations.
He said if necessary, it would be better for the country to only have one or a few fuel suppliers as they would be able to deliver and at the same time not abuse the foreign currency allocations.
In July the Central Statistical Office painted a gloomy picture of the country’s manufacturing sector. It said, for instance, agriculture had declined by 40%.
The figures revealed that between 1990 and 1998, the country’s manufacturing sector grew by 6,6% while between 1998 and last year the gains had been reversed.
Between 2000 and 2003 the country experienced the closure of 750 firms which led to retrenchment of workers.
However, last year’s industrial study is still to be completed to ascertain performance of the manufacturing sector as the consultant is finalising the document.
In his monetary policy review Gono also painted a grim picture of the country’s economic performance predicting that the economy would this year shrink by 5%.
Last year, the country’s gross domestic product (GDP) declined by 9% largely due to government’s fiscal indiscipline, the chaotic land reform programme and poor policy structures.