External arrears reach US$1,8b

Ngoni Chanakira

GOVERNMENT continues to be the major source of the country’s total external arrears that have surpassed US$1,8 billion.



rif”>NMB Holdings Ltd chairman Paddy Zhanda told shareholders that Zimbabwe’s balance of payments position remained precarious, especially in 2003.


The major reasons for the poor balance of payments position was poor export performance coupled with the absence of external capital inflows.

“The country’s total external payment arrears continued to rise in 2003,” Zhanda said. “As of December 2003, external payment arrears were estimated at about US$1,8 billion, up from US$1,3 billion at the end of December 2002.”


He said a breakdown of the external arrears shows that government arrears account for the largest portion at $1,2 billion, which is 67% of the total figure.


Parastatals and the private sector account for US$558 million (31%) and US$15 million (2%) respectively.


Former Finance and Economic Development minister Herbert Murerwa and Reserve Bank of Zimbabwe (RBZ) governor Gideon Gono in their national budget and monetary policy statements respectively promised to end the money-spending honeymoon.


They said every cent taken from the central bank would now have to be accounted for.


The country’s exports of goods and services are estimated to have nose-dived by 3,9% from US$1 603 million in 2002 to US$1 540 million last year.


Imports of goods and services fell less steeply from US$2 634 million in 2002 to US$2 618 million in 2003.


Zimbabwe is estimated to have recorded a current account deficit of US$1 130 million, slightly up from US$1 044 million in 2002.


The capital account deficit, on the other hand, is estimated to have declined from US$345 million in 2002 to US$309 million in 2003.


“The overall balance of payments deficit for 2003 was therefore US$1 439 million,” Zhanda said. “Against the background of the weak balance of payments position, gross official foreign currency reserves for 2003 are estimated at US$175 million, which represent approximately one month of imports, while usable reserves were much lower at just under US$40 million.”


Failure to make timely payments to creditors has resulted in Zimbabwe being downgraded in international ratings and causing problems for financial institutions needing lines of credit.

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