Zimbabwe government figures blamed exporters on Monday for exacerbating a dollar shortage and warned the power utility against fueling inflation as the state grappled with a mounting economic crisis.
The southern African nation is gripped by a severe dollar crunch, a tumbling local currency and mounting inflation, which hit 75.86% in April.
Anger over fuel and medicine shortages triggered violent street protests in January and has piled pressure onto the government of President Emmerson Mnangagwa who had promised to revive the economy after the fall of Robert Mugabe.
Treasury secretary George Guvamatanga pointed the finger at exporters, accusing them of keeping $900 million of their earnings in offshore banks – money that he said should be repatriated to ease the dollar shortages and help stabilize the exchange rate.
At the same parliamentary hearing, Finance Minister Mthuli Ncube warned state power utility ZESA Holdings against hiking rates, saying it would add to inflation and hit customers already angered by an increase in outages.
The crisis and worries of further unrest have undermined Mnangagwa’s efforts to win back foreign investors who left under Mugabe, whose 37-year rule ended in a coup in November 2017.
On Monday, the local RTGS dollar was trading at 5 to the U.S. dollar compared to 5.5 on Friday. On the black market, the unit was weaker at 7.50 versus 7 on Friday, traders said.
The new currency has lost 50 percent of its value on the interbank market since it started trading on Feb. 22.
“UNPOPULAR AND UNWELCOME”
Guvamatanga, permanent secretary for ministry of finance said that $500 million out of last year’s $4.3 billion export earnings was still being kept offshore.
Another $400 million was outstanding from the January to May 2019 exports, which earned $1.4 billion, he said. Exporters were also keeping $800 million in local foreign currency accounts, he added.
“There is $1.7 billion that should be available in this economy to pay for the pharmaceuticals, to pay for the fuel and all the requirements we need as an economy,” Guvamatanga said.
Exporters have 90 days to repatriate earnings to the country, but some of them take longer.
Some, speaking on condition of anonymity, said they were reluctant to sell their money on the official market, where traders say the central bank is influencing the exchange rate.
They also said they were worried that once they had sold their money, there would be delays in getting dollars again on the local interbank market when they wanted to pay for imports.
Guvamatanga said the government “does not have the intention whatsoever to grab exporters’” dollars.
Zimbabwe last week hiked fuel prices by around half, the second sharp rise in four months, a day after the central bank effectively removed a subsidy by ending oil importers’ access to U.S. dollars at a favourable rate.
State power utility ZESA said last month it had applied to the energy regulator to raise its tariff by 30 percent for maintenance of its grid and after the price of diesel and other inputs went up.
Finance Minister Ncube told the parliamentary committee although electricity was still cheaper compared to regional peers, at 2.5 U.S. cents per kilowatt hour, any further tariff increase would hit consumers hard.
“Any ill-advised sharp tariff rate increase combined with the power outages will be most unpopular and unwelcome and will certainly trigger another round of price increases and inflation,” Ncube said.