THE raging foreign currency exchange rates are a reflection of supply and demand dynamics and could be addressed through increased domestic production and exports, Reserve Bank of Zimbabwe (RBZ) Deputy Governor, Dr Jesimen Chipika, has said.
Speaking at a recent meeting of chartered secretaries and administrators in Victoria Falls, she said the supply of foreign currency in Zimbabwe was insufficient to meet demand.
“We need higher productivity in all sectors. We need more exports,” said Dr Chipika, adding that Zimbabwe lacked the financial support that other countries had from international financial institutions.
The Deputy Governor explained that the new bond notes found on the parallel market were largely coming from exporters of gold, tobacco and cotton, who are partly paid in cash for the foreign currency they surrender to the Reserve Bank.
She was responding to questions during a panel discussion on the Transitional Stabilisation Programme (TSP) during the Institute of Chartered Secretaries and Administrators in Zimbabwe annual indaba. Dr Chipika was asked where the new bond notes found on the parallel market came from when banks did not even have old ones.
On cash shortages, the Deputy Governor said the fact that more than 90 percent of transactions were electronic was a good development although it had come about largely as a result of a cash shortages following the “dollarisation” of the economy.
She said the RBZ intends to provide banks with more cash but would do so only gradually, and in exchange for RTGS balances in the banks to minimise inflationary effects.
Although cash is still needed for some small transactions, some of those queuing at banks for cash were not doing so because of real need but for speculative purposes, said Dr Chipika.
Zimbabwe National Chamber of Commerce chief executive, Mr Christopher Mugaga, said events on the ground were overtaking what was in the Transitional Stabilisation Programme.
Former Masipe Consultants governance consultant, Mr Peter Madara, said it was disturbing that Zimbabwe was exporting manpower at a time the economy needed its best brains.
He said the country was not gaining half as much in remittances from the diaspora as it would gain if those people were working in Zimbabwe.
United Refineries chief executive, Mr Busisa Moyo, said the manufacturing sector was struggling as demand was low.
There are supply problems, he said, adding that farmers were not providing sufficient raw materials to industry. While industry appreciated the positive impact of the two percent transactional tax on Government revenues, the tax was negatively affecting the already overtaxed formal sector.
The TSP (2018-2020) is the Government’s two-year transitional programme meant to lay the foundation for subsequent five-year plans.