Enacy Mapakame BH24 Reporter
A relaxation of Statutory Instrument 64 of 2016 (SI64) that restricts the importation of goods that can be produced locally has contributed to a widening of Zimbabwe’s trade deficit during the first four months of this year, analysts say.
The gap between exports and imports rose 66 percent to $999 million in the review quarter, according to figures from the Reserve Bank of Zimbabwe released end of May. The deficit was at $603 million in the comparable year ago period.
The sharp deterioration in Zimbabwe’s net trade position is disappointing, analysts say, and that may have to do with a lack of enforcement of the law limiting imports of goods that can be manufactured locally.
“We believe that the trade deficit has started widening again due to the relaxation of the import restrictions (SI 64) which do not seem to be as enforced as they were last year,” stockbrokers, IH Securities, said in a new report on the banking sector.
The brokers also blame “a grainy demand for foreign currency, as corporates increase investments on the back of renewed positive sentiment.”
Zimbabwe’s external position improved markedly after Government in 2016 restricted the importation of several products under the Open General Import Licence-basically the kind of goods cross border traders could import licence-free – to boost domestic production.
More than $1 billion import savings were achieved in 2016 on account of the law, Government data shows. But the Statutory Instrument was scrapped in October last year.
And, as industrial production started to rise, their demand for forex to buy raw materials abroad also increased – a double blow for Zimbabwe’s goods trade position.