THE country’s current and capital accounts last year registered a fourth consecutive decline, a situation the Reserve Bank of Zimbabwe (RBZ) concedes is a major challenge in its eco
nomic turnaround plans.
In its 2003 annual report, the RBZ said the current account registered a deficit of US$581 million.
The central bank also said by the end of last year, the capital account had a deficit of US$248,7 million.
A current account depicts the country’s exports and imports performance.
The capital account reflects the country’s foreign direct investments, which also includes foreign aid and grants.
Gideon Gono’s central bank said the country’s balance of payments performance continued to decline in 2003 to an overall deficit of US$334,8 million compared to US$496,3 million in 2002.
The central bank said exports declined by 13,8% to US$1,2 billion in 2003, from US$1,4 billion in 2002. This was marked by declines in agriculture (-20%) and manufacturing (-2,3%), which offset a growth of 12,7% in mineral exports.
It said the decline in agricultural exports to US$517,1 million from US$646,6 million in 2002 mirrored falls in tobacco (-26,1%), horticulture (-7%) and beef (-95,8%).
“Export performance in this sector (beef) was largely constrained by persistent foreign currency shortages which affected the procurement of essential inputs in the sector and foot and mouth disease, coupled with the 2002 drought which depleted the national herd,” the report said.
“Manufactured exports declined from US$287,2 million in 2002 to US$280,6 million in 2003 due to loss of export competitiveness aggravated by high domestic inflation, which stood at 598,7% in December 2003, as well as a shortage of foreign exchange to procure imported raw material.”
The RBZ said mineral exports, however, grew to US$334 million in 2003 from US$296,3 million in 2002.
During the same period total imports decreased by 15,4% from US$1,8 billion in 2002 to US$1,5 billion last year mainly because of declines in imported intermediate inputs, food and energy, constituting over 50% of total requirements.
Last year food imports declined by 5,6% from US$214 million in 2002 to US$202 million last year due to lower than anticipated maize imports.
“Energy imports declined by 41,6% from US$378,5 million in 2002 to US$221,2 million in 2003 with electricity imports accounting for 24,6% of this, while fuel imports accounted for the balance. Fuel imports declined by 48,4% from US$323 million in 2002 to US$166,7 million in 2003,” the report said.
“At the back drop of these developments the current account registered a deficit of US$581 million. The capital account registered a fourth successive deficit of US$248,7 million.”
The central bank said the deficit was largely caused by the suspension of the balance of payments support from multilateral organisations, “net outflows of long-term and short-term capital, and negligible foreign direct inflows”.