HARARE – Zimbabwe’s exports continue to struggle to match imports thereby continuing the country’s worrying downward trade deficit trend, says the Abidjan-based African Development Bank (AfDB).
In its monthly economic review for April, the continental bank says “performance of (Zimbabwe’s) exports remains worrisome”, with exports in January this year valued at $280 million, an “insignificant” increase of only 8.5% compared to January 2012.
“However, this was a significant decrease of about 21.3% compared to the value of exports recorded in January 2011,” says the report.
“This same trend is also apparent in February 2013, where exports increased by about 9.1% compared to February 2012 but fell by about 18.7% compared to the value in February 2011. The trends reveal that imports have more or less been contained but exports are not increasing at a rate that is high enough to wipe off the trade deficit.”
Zimbabwe’s trade deficit stood at about $221 million in February, slightly more than its figure of $215 million in February 2012. AfDB urged local authorities to continue to prioritize measures to boost exports, “especially given that the trade deficit is being largely financed through further accumulation of arrears”.
On benefits of the current bank reform efforts of the Reserve Bank of Zimbabwe (RBZ), ADB said – despite the measures – as from November 2012 the country’s loan-to-deposit ratio remained outside the internationally-recommended ratio of 70 to 90%, something that was “not commendable”.
There was, however, a marked decline in average lending rates which could partly be attributed to the signing of a Memorandum of Understanding (MOU) between the banks and central bank which stipulated that effective February 1st 2013, only a maximum of 12.5% interest margin “would be allowable over and above the bank cost of funds”.
In line with the MOU on reducing lending rates, Old Mutual and the National Social Security Authority (NSSA) reduced their lending rates to banks from 10% to 7%.
AfDB said it was encouraging that the RBZ had extended the deadline for banks to meet new capital requirements from July 2014 to 2020. Many of the banks, however, continued to work towards the old deadline until written confirmation of the extension is finally available from central bank.