Zimbabwe’s balance of payments position continues to strengthen, having jumped 4.25% in 2020 compared to the same period last year due to strong export growth.
Rarely, and until the advent of the second republic, Zimbabwe had grown accustomed to perennial negative BoP positions, with imports far outpacing exports with astonishing regularity.
A positive balance of payments means that more money (especially the elusive foreign currency) is flowing into a country than is leaving it, while a negative balance of payments indicates the opposite.
Figures from the 2021 Monetary Policy Statement presented by Reserve Bank of Zimbabwe (RBZ) Governor John Mangudya last week showed exports rose 5.8% to $4.9 billion in 2020.
Dr Mangudya said export performance was driven by platinum group metals, which saw significant price growth for palladium and rhodium. This was, however, partially offset by falling prices for gold, tobacco, chrome and manufactured goods.
On the other hand, imports increased by 5.1% over the same period to reach $4.7 billion, compared to $4.5 billion in 2019, despite sharp declines in electricity, fuel , raw materials, machinery, manufactured goods and vehicles.
“This was primarily due to the impact of Covid-19 restrictions domestically and externally. Food imports, however, increased by 204%, from $194.3 million in 2019 to $591 million in 2020,” Dr Mangudya said.
The increase in food imports was mainly due to rice, maize and wheat. Dr Mangudya said maize imports increased sharply from US$26.7 million in 2019 to US$297.8 million in 2020, due to consecutive droughts.
The central bank chief said the services sector had been affected by the Covid-19 pandemic during the year under review, with exports and imports well below pre-pandemic levels.
Services exports fell from US$603 million in 2019 to US$331 million last year, due to a sharp contraction in exports of travel, transport and other business services.
“Containment measures imposed by the government in response to the Covid-19 pandemic have limited the movement of people in and out of the country,” noted the central bank governor.
Similarly, imports of services decreased by 15.3% from US$909 million in 2019 to US$769 million last year due to Covid-19 related disruptions, which affected retail chains. global supply and trade.
Dr Mangudya said Zimbabwe’s current account is expected to remain in a surplus position this year, albeit by a somewhat reduced margin, as improved foreign investment and other capital inflows bolster imports.