ZIMBABWE’S current account deficit for the year is forecast to remain at around US$1 billion with merchandise exports expected to remain weak, a leading financial institu
tion has said.
NMB Holdings Ltd (NMB), which recently had its foreign currency trading licence withdrawn by the Reserve Bank of Zimbabwe, said merchandise imports were expected to end the year at US$2 billion, against a background of declining Foreign Direct Investment (FDI) and the absence of much-needed balance of payments support.
Zimbabwe had its balance of payments support facility with the International Monetary Fund withdrawn after the country failed to make timely repayments to the Washington-based institution.
NMB chairman Paddy Zhanda said a capital account deficit of about US$300 million was forecast for this year, up from about US$200 million in 2002.
“As a result of the weak balance of payments position, gross foreign exchange reserves are expected to average about one month of imports while usable reserves are expected to cover only a few days of imports,” he said in an analysis of the economy.
Zhanda said Zimbabwe’s total external payment arrears were estimated at US$1,6 billion as at June 30 this year from a position of US$1,3 billion at December 31 2002.
Government arrears account for 67% (US$1,07 billion), while parastatals and private sector arrears represent 31% (US$0,5 billion) and 2% (US$0,03 billion) respectively.
The chairman said given Zimbabwe’s weakening export performance, donor support would be required for grain imports.
The first half of the year saw continued designation of farms and the establishment of a land audit committee to review the allocation of land distribution under the controversial fast-track phase.
Zhanda said agrarian reforms were unlikely to succeed without a “clearly defined tenure system, adequate technical and financial support to the new farmers and systematic development of support infrastructures”.
“External financiers and partners will be needed to alleviate the external debt crisis and provide support for the country’s balance of payments deficit,” Zhanda said.