Zimbabwe will soon run out of money: Baz

HARARE - Bankers Association of Zimbabwe (Baz) has warned that Zimbabwe will soon run out of money to sustain imports.

Joseph Mverecha, Agribank divisional director, speaking on behalf of Baz president Sam Malaba at the Gweru Agricultural Show business conference last week,  said Zimbabwe’s depressed economic performance was ominous.

“The trade deficit that we are experiencing, sooner or later, we will run out of money to finance it,” Mverecha said.

He said since 2010, Zimbabwe’s import bill had ballooned from $1,5 billion to about $6 billion in 2014.

“Since dollarisation, our current account has drastically increased and at some stage we will fail to pay for those imports,” Mverecha said. He predicted that the country would witness a decline in imports soon.

The influx of imports into the economy has been met by insignificant exports which are largely in raw form, hence noncompetitive on the international market.

Imports in Zimbabwe increased to $528,18  million in June of 2014 from $510 million in May of 2014.

Mverecha said Zimbabwe needed fresh money to shore up the economy.

“We need fresh capital into the economy,” he said.

Zimbabwe has failed to attract the much-needed foreign direct investment (FDI) due to a cocktail of government policies hostile to investors, chief among them the Indigenisation and Economic Empowerment Act, which requires foreign firms to cede 51 percent to locals.

Comments (7)

THIS IS A VERY IRRESPONSIBLE STATEMENT!! BAZ should know by now that banks have not done enough to restore people's confidence in using banks, hence there is more money in the informal sector than in the banking system. As it is banks are actually penalising the few that do use them by charging pathetic interest rates or none at all and levying a punitive $2 for every withdrawal!! On the other hand, when you want a loan they charge sky-high interest!!

ZVOKWADI - 5 August 2014

I beg to differ, its not the punitive interest rates going on at the banks that is to blame my friend. Our policies are misplaced so is our priorities at policy level. That companies are closing down at the rate of 10 per month is it an issue of interest rates? That our grain maize price at GMB is higher than importing the grain is it a problem of interest rates? That we have too little electricity hence the load shedding leading to no wheat production is it a problem of interest rates? That there are currently very little job openings is it a problem of interest rates? That cost production models in many cases are higher than regional models so much that it becomes cheaper to import is it because of interest rates? That maize production has gone drastically low per unit area than before is it a problem of the interest rates? Please lets us not be shallow minded and reckless in reasoning! The comment is spot on .. it says a cocktail of problems meaning there are so many problems.

tonde - 5 August 2014

The bank charges keep potential depositor at bay. Previously or long back banks use to pay interest on savings accounts at a certain rate but today they think as if they are dealing with zimdollars. Big fishes are investing assets not cash because of bankers .

WATYOKA T S - 5 August 2014

At Tonde, yes there are a cocktail of challenges in the economy but I also think the statement by BAZ was irresponsible and reckless. Such statements might cause a run on deposits and further worsen the issue of people having to keep their cash at home. If FX runs out in the formal channels, the RBZ will raid individual accounts to sustain "critical" government requirements. Punitive interest rates by banks are still an issue that is working against re-capitalisation of industry and or are chocking industries to death - look at PG. LIBOR rate is less than 7% yet our interest charges are around 15% - 25%. Low to non-existent interest on deposits is discouraging a culture of saving. Our import bill is already dwindling not because there is no cash for imports but because there is softening demand on the local market.

Choga - 5 August 2014

The only way out of our situation, though painful, is for everything to grind to a halt. This will make political leaders wake up. As long as we can 'make' it day by day the situation will continue as is. Zanu PF (ruling party) has perfected the art of carrying on even under those circumstances as if nothing is happening. This is why I say we need total system collapse to get real change wherever it may come from.

Cde - 5 August 2014

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As long as bank charges are exhorbitant, I will keep my money under the pillow. Let the banks run out of money if so they wish. I will keep mine, whilst they keep their buildings and empty safes.

machakachaka - 6 August 2014

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