Maize imports to worsen Zim debt woes

Eric Chiriga

THE importation of maize will worsen the country’s balance of payments deficit and domestic debt, economic analysts say.



s-serif”>It will also mean the abandonment of capital projects like the Matabeleland Zambezi Water Project and Tokwe Mukosi dam since the government is going to divert the money earmarked for infrastructure development towards food imports.


Government had initially earmarked $5 trillion for infrastructure development.

Zanu PF spokesman, Nathan Shamuyarira, confirmed in an interview with the Zimbabwe Independent a fortnight ago that government would divert resources meant for infrastructure development towards food imports.


Economic analyst John Robertson said the importation of maize would have a serious impact on the balance of payments considering that export revenues are currently decreasing.


“Zimbabwe might have a stockpile of Zimbabwean dollars but will face serious problems trying to raise the required foreign currency,” he said.

Zimbabwe needs more than US$156 million for maize imports alone to see the country through to the next season.


However, the government-controlled forex auction is failing to meet market demand. Robertson said it was a curious reversal because the country used to earn revenue from exports of surplus maize.


“We have been experiencing balance of payments deficits since 1997 and this has been contributing to the increase in domestic debt.”


Best Doroh, an economist with Finhold, said maize imports would put a huge strain on the country’s balance of payments and would worsen the foreign currency shortage.


“We are already failing to raise enough foreign currency for basic imports like fuel and electricity,” Doroh said.


Last year, Zimbabwe’s domestic debt hit $3 trillion from $590,5 billion in December the previous year.


Analysts say the domestic debt will continue to soar because of the need to fund various other imports such as electricity and fuel.


Balance of payments is a record of a country’s receipts from and payments to other countries. It includes international financial transactions of a country from commodities, services and capital.


The balance of payments can be split into two: the current account which deals with international trade in goods and services and transactions in assets and liabilities which deals with overseas flows of money from international investments and loans.


According to the 2005 national budget presented by Finance minister Herbert Murerwa, the country’s balance of payments stood at a deficit of US$523 million in 2004 from US$335 million in 2003.


The current account deficit, however, improved from US$581 million in 2003 to US$338 million in 2004.


The capital account recorded a deficit of US$185 million due to low foreign direct investment while the 2005 national budget had a deficit of $4,5 trillion — 5% of gross domestic product.

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