RBZ optimistic on price stabilisation

The Reserve Bank of Zimbabwe (RBZ) is optimistic that basic commodities' prices will remain stable due to continuous allocation of foreign currency towards procurement of critical raw materials.

Since November last year, prices of commodities increased due to foreign currency shortages and inflation, but the situation has changed since the opening of tobacco auction floors.

However, the flow of foreign currency in the economy has not been smooth due to fiscal indiscipline in the market as the money is subjected to hoarding and externalisation.

At least US$300 million of the US$900 million mobilised by international buyers is already in the market to oil the operations of critical sectors.

The impact has, however, been limited due to the fact that many companies have serious backlogs that date back to 2016.

RBZ governor, Dr John Mangudya, recently told The Sunday Mail Business that prices have been stabilising and more is being done to ensure that they will further go down.

"Prices of most basic commodities have remained stable over the first four months of the year. Given the increase in allocation of foreign currency this year, we remain optimistic that prices of all essentials will remain stable.

"We are constantly giving oil producers and other basic commodities' producers forex allocations every week to avert potential shortages," said Dr Mangudya.

He said even 2018 first quarter inflation figures of around 2,68 percent show that the situation is very stable on the ground.

In a snap survey conducted by this publication, beef is at an average price of US$4,50per kilogramme against US$6, 30 in November last year, 1 kg packet of salt is going for 45c and has remained at that price for over six months, while 2kg sugar remains at US$1, 95; 2 litres of cooking oil is going for US$3, 39 against $4, 50 in December 2017 and mealie-meal remains at US$4, 50 per 10kg bag.

Government and the ruling Zanu-PF party have since set up some special task-forces, which oversee the provision of basic commodities at affordable prices so that they are not caught unaware like what happened in September last year.

These committees work closely with RBZ to ensure continuous supply of forex to the manufacturing industry.

The inter-ministerial task force is working across all provinces.

Meanwhile, Industry, Commerce and Enterprise Development Minister Dr Mike Bimha has said there is no reason to hike prices as foreign currency allocations to buy critical raw materials remain constant.

He said the central bank is allocating US$35 million a week for basic and essential commodities importation with around US$20 million being spent on fuel and electricity imports.

He said the availability of foreign exchange has remained stable due to growing exports.

Of the US$1,5 billion Nostro Stabilisation Facility from Cairo-headquartered African Export Import Bank (Afreximbank), the country has drawn down over US$800 million to start addressing the foreign currency deficit on the market.

The Nostro Stabilisation Facility is meant to deal with ongoing delays in the processing of foreign payments by banks for the procurement of productive imports as part of a raft of measures to stabilise the economy.

Since the opening of the tobacco marketing season, the country has earned over US$360 million, which is expected to ease foreign currency shortages in the near future.

RBZ has also released US$500 million under the Export Incentive Facility to stimulate production and ease cash shortages.