ZIMBABWE’S international payments backlog has surged by over 200 percent to $570 million, from $186 million in May, central bank governor John Mangudya has said, as the country’s foreign exchange shortages intensify.
The Reserve Bank of Zimbabwe (RBZ) governor last week told The Financial Gazette that he expected the situation to ease by mid-month as government begins drawing down on a $600 million nostro-stabilisation facility from the African Export Import Bank (Afreximbank). The country which uses a basket of currencies including the United States dollar, South African rand and local bond notes, among others is battling a foreign exchange shortage that appears to have worsened since the closure of the tobacco selling season last month.
The shortages have resulted in a backlog of foreign payments, which has forced a number of companies to source hard currency from the black market to meet their foreign obligations. “There are two forms of foreign payments those backed by resources and a wish-list, were people want to repatriate but there is no money. So those backed by money in their accounts currently stands at about $220 million, while the wish list around $350 million.
So, if we add these with those which have no money backing them, the total comes to $570 million. That is our backlog,” Mangudya said on the side-lines of a meeting between business and President Robert Mugabe at State House. Mangudya said the $600 million nostro stabilisation facility from Afreximbank was a desperately needed reprieve. “We are looking for foreign currency to meet some of the challenges and we hope that by mid of this month, we will have drawn down the Afreximbank nostro stabilisation facility to meet some of the critical payments that you have given us and we are going to continue exporting our gold and platinum. I remain optimistic things will be contained with the coming on board of the facility,” he said.
Last week, Mangudya announced that about 67 correspondent banks had dumped the country in a de-risking exercise. In June, the number of correspondent banks Zimbabwe stood at 50. He said the country’s risk profile was working against it as correspondent banks ― supposed to clear payments between local financial institutions and foreign suppliers ― were moving to minimise Zimbabwean transactions in a risk skirting move.
As a result of the payment delays, government has drawn up a priority list for foreign payments and imposed a ban on some imports it deems to be non-essential in a bid to ration the little available foreign currency. Most businesses are buying foreign currency on the black market at a premium to facilitate imports as the situation continues to deteriorate. Over the past few months, cash premiums have risen from about 10 percent to the present 35 percent for high value notes.