Zimbabwe News and Internet Radio

Zimbabwe inflation ticks up as remittances fall

By Tawanda Karombo | IOL |

Zimbabwe on Wednesday painted a picture of declining investment flows, rising inflation and dwindling remittances, as the Constitutional Court in Harare dismissed a challenge to President Robert Mugabe’s powers to decree the introduction of bond notes.

Former vice-president and now opposition leader Joice Mujuru challenged Mugabe’s constitutional authority to issue the notes.

“Our court case has been dismissed on a technicality, but we are not surprised, and we will let the world know of our next step in the next 24 hours,” Mujuru’s spokesman, Gift Nyadoro, said.

This development came as Zimstats said that “prices, as measured by the all-items Consumer Price Index (CPI), increased at an average rate of 0.23 percent from December 2016 to January 2017”.

The agency said the year-on-year inflation rate for January, as measured by the CPI, stood at minus 0.65 percent, gaining 0.28 percentage points on the December 2016 rate of  negative 0.93 percent.

John Mangudya, the governor of the Reserve Bank of Zimbabwe, said he expected inflation “to move into positive territory in 2017 for the first time since September 2014, on the back of an anticipated increase in international oil prices and domestic-sector recovery”.

Imports for the same period have declined by 11 percent to $5.3 billion (R70.04 billion).

“Driven by merchandise trade developments, the current account deficit is estimated to have narrowed down by about 15.5 percent, from a deficit of $1.5 billion in 2015, to a deficit of $1.3bn in 2016, partly on account of the projected decline in the import bill,” governor Mangudya said.

Remittances, which have become a major source of “import financing”, declined by 17.9 percent in 2016 to $1.5 billion.

Of the total amount received in 2016, $779 million reflects remittances from diaspora Zimbabweans, while remittances from international non-government organisations amounted to $795 million.

“While private-sector foreign loans have continued to be a major source of liquidity in the economy since the adoption of the multi-currency system in 2009, they also continue to increase the country’s gearing or leveraging ratio.

“This scenario is to be improved by encouraging equity, as opposed to relying solely on loan finance,” Mangudya said.