Nostro facilities sustain critical imports Dr Mangudya
Dr Mangudya

Dr Mangudya

Oliver Kazunga, Acting Business Editor
THE intervention by the Reserve Bank of Zimbabwe (RBZ) in the foreign exchange market through $1.1 billion nostro stabilisation facilities drawdowns last year have significantly assisted in sustaining the financing of critical imports.

RBZ Governor Dr John Mangudya said this yesterday while presenting the 2018 monetary policy statement.

He said the worst could have happened on the economy especially in September had it not been for the positive impact of the nostro stabilisation facilities.

“The intervention by the RBZ in the foreign exchange market through drawdowns from nostro stabilisation facilities amounting to $1.1 billion during 2017, immensely assisted to stabilise the forex market and sustain financing of critical imports such as fuel, electricity, medicines, fertilisers, agro-chemicals, soya crude oil for cooking oil, cash imports and raw materials for industry,” said Dr Mangudya.

He said drawdowns from the nostro facilities and the utilisation of bond notes amounting to $290 million as at December 31, 2017 went a long way in stabilising cash shortages in the country.

He said a good number of manufacturing firms in sectors such as food products, packaging, fertilisers, agro–chemicals and fuel distribution have greatly benefited from the nostro-stabilisation facilities.

Dr Mangudya also said the companies were benefiting from the Statutory Instrument the Government put in place to support local production.

To ensure the competitiveness of Zimbabwe’s exports, the Central Bank has also established the $200 million and $300 million export incentive facilities which are monetised by bond notes.

“Since its inception in 2016, the export incentive scheme has enhanced competitiveness of Zimbabwe’s exports and this has significantly contributed to the growth of exports which grew by 36 percent from $2.8 billion in 2016 to $3.8 billion in 2017,” he said.

The RBZ boss said the African Export Import Bank (AfreximBank) backed interbank market facility, which was introduced in 2015 with a limit of $200 million, has also gone a long way in alleviating liquidity challenges last year.

“The facility will run for another two years until February 2019.”

Dr Mangudya reiterated that RBZ was negotiating for a $1.5 billion loan guarantee with the AfreximBank to protect foreign investor funds from Zimbabwe’s high risk profile and for liquidity support.

In December 2017, AfreximBank president and chairman Okey Oramah who was in the country announced that his institution would avail a $1.5 billion loan to Zimbabwe to fund economic recovery programmes.

Dr Mangudya said the country was also negotiating for a seperate $400 million facility for essential imports and to repatriate investor funds.

As part of efforts to attract Diaspora investments, the Central Bank in the 2018 monetary policy statement announced several measures such as allowing Zimbabweans abroad to open investment accounts with local banks.

“The accounts which shall be for savings/investment purposes will be entitled to a seven percent Diaspora Remittance Incentive from the RBZ over and above the interest charged by the bank,” he said.

The central bank will also issue tobacco and gold financing bonds to Diaspora investors.

“The Diaspora Tobacco Production Financing Bond will be issued to Zimbabweans in the diaspora to finance tobacco production. Bond holders will be paid capital plus interest as single bullet payment at the end of the tobacco season,” said Dr Mangudya.

In order to enhance foreign currency inflows from tobacco and gold production, the tobacco input finance facility has been increased from the $28 million disbursed last year to $70 million, while the gold support facility has been increased from $74 million (disbursed to 255 entities) in 2017 to $150 million.

“Financing tobacco and gold and other exportable products such as horticulture, mining, tourism, among others using RTGS funds seated at banks is beneficial for generating foreign exchange for the country.

“In line with the tobacco finance order, deserving tobacco merchants shall be granted authority by the Bank to use RTGS money to purchase tobacco from the auction floors. This dispensation shall also apply to deserving cotton merchants,” he said.

@okazunga

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