ZIMBABWE is failing to remit cash for external payments due to a depletion of nostro account balances,businessdigest can reveal.
Taurai Mangudhla/Elias mambo
Currently, the country is only able to remit only US$300 million externally per month compared to a monthly demand of about US$450 million, leaving a shortfall of US$150 million, sources close to the Ministry of Finance said. This shortfall has been accumulating for a while and poses a serious threat to steady supplies of essential imports such as electricity and fuel, while causing Zimbabwe’s external debt and arrears, already in excess of US$10 billion, to balloon.
“Currently government has instructed the Reserve Bank of Zimbabwe to use a priority list and things like paying the balance for government’s acquisition of the VimpelCom 60% stake in Telecel and car imports from Japan are not a priority,” said a source who requested not to be named.
As a result, the source added, the deadline for government to clear the balance for its acquisition of Telecel has been pushed from February to end of September.
“Zesa owes Mozambique US$23 million and its failing to pay because the nostro accounts are empty. Last month Zesa officials were in Mozambique firefighting because Mozambique was now threatening to switch them off. This is the same situation with Eskom,” the source added.
Government is looking for US$150 million to beef up nostro accounts through some proposed structures. Low nostro account balances and a surge in government borrowings last year triggered biting liquidity shortages, a March 2016 report on the country’s financial situation has shown.
According to a research note by Zimnat Asset Management, low confidence in the economy could trigger capital flight.
“The real problem is that we are importing more than we are exporting,” the source said.
Zimbabwe’s liquidity crunch has been worsening due to a sharp decline in foreign capital inflow over the years as well as deindustrialisation that has seen the country export less.
Zimbabwe’s industries are singing the blues as poor infrastructure, rampant corruption and depressed demand for local goods coupled with a generally high cost of doing business suppress the manufacturing sector’s growth prospects. This has seen industry’s capacity utilisation plunging from 36,5% in 2014 to 34,3% in 2015, according to the latest manufacturing sector survey. The sector has been struggling to stay afloat as capacity utilisation, which had risen to 57,2% in 2011, declined to 39,6% in 2013.