Trade deficit hits $1 billion

The country is battling for solutions to address trade deficit, which hit $1 billion in the first four months of the year, Reserve Bank of Zimbabwe Governor Dr John Mangudya has said.

Dr Mangudya said this while giving oral evidence before the Parliamentary Portfolio Committee on Energy and Mines yesterday.

"During the first four months of the year, January to April, we had $2,2 billion of imports versus $1,2 billion of exports.

"(This means) so far we are almost a billion (trade deficit)," said Dr Mangudya.

Trade deficit refers to the amount by which the cost of a country's imports exceeds the value of its exports.

Simply put, a trade deficit implies that a country is losing most of its currency to its trading partners.

In the first five months of this year, $374 million was used to import fuel.

This comes as Zimbabwe is fighting to keep foreign currency in the country and only use it to import key commodities such as fuel which are not readily produced locally.

Government introduced Statutory Instrument 64 of 2016, almost one and half years ago as part of measures to prevent leakages of foreign currency.

Forty-three products including cooking oil, milk products and building materials were included on SI64 but such products still find their way into the country through the porous borders.

Last year, the country's trade deficit stood at $1,8 billion after imports shot up to $5,5 billion against exports of $$3,7 billion.

Market watchers fear that if the current rate of imports continues unchecked, the trade deficit could surpass $2 billion this year.

Dr Mangudya said it was important that there is trade balance in the economy.

Statistics from Zimbabwe National Statistics Agency (Zimstat) show that the country imported goods worth $271,6 million while it exported goods of up to $120,9 million in the first three months of the year.

This created a trade deficit of $150,7 million. South Africa is Zimbabwe's biggest trading partner.

Dr Mangudya said it is critical for manufacturers to seriously consider exporting some of their products to ensure there is balance in trade.

The RBZ has introduced export incentives of up to 12,5 percent of total exports to encourage exports.

Tobacco and gold are currently the biggest foreign currency generators in the country.

In 2016, tobacco generated $771,8 million while $827,4 million had been generated by November 22 last year.