Zimbabwe: RBZ Auction's Weekly Allotments Suffer Severe Reduction

The Reserve Bank of Zimbabwe (RBZ) weekly's allotments this week reduced significantly to from last week's peak of US$40 million to US$26,8 million as President Emmerson Mnangagwa's new economic containment measures kick in.

Mnangagwa ordered the central bank not to allot unavailable foreign currency on Sunday.

In the past weeks, the RBZ would allot as much as US$40 million per week hinging the commitments on yet to be received foreign currency.

"The declines indicate the RBZ's commitment to depart from the old ways of allotting foreign currency in the hope that backlogs would be settled upon receipt of futuristic payments. The practice ended up creating huge backlogs so what we see now as total disbursed amounts have dwindled to as low as US$26 million is a reflection of allotting the readily available resources," Mnangagwa said.

The need to curb further accrual of US dollar backlogs comes against a background where most companies have bemoaned the delays which they criticise for delaying critical raw materials imports and choking productivity.

A trading update released at the close of business shows that priority went towards productivity stimulation on the SME Auction where a total 356 bids were received with main allotments going towards raw materials which received US$943 388, machinery and equipment US$1,3 million, consumables US$484 561, services US$405 151, retail and distribution US$331 397, pharmaceuticals and chemicals US$206 892, paper and packaging US$109 694.

A similar trend was sustained on the Main Auction where a total 356 bids were accepted with raw materials receiving a total US$3,8 million, raw materials US$10,6 million, machinery and equipment US$6,4 million, consumables US$1,6 million and services US$1,5 million among other allotments.

The grand total allotted on the day was US$26,8 million.

Meanwhile, some listed companies have since expressed optimism that the resulting turbulent times which have seen a shake-up of the country's economy will be addressed through measures and strategies being improvised by the central bank.

Presenting a trading update for the period ended March 2022, NatFoods company secretary, Leigh Howes, said volume momentum for the third quarter slowed, with an increase of only 3% relative to prior year partly due to inflationary pressures.

"Whilst consumer demand remains solid, it has clearly been impacted by the recent resurgence in inflation. To this end, we welcome and support the measures taken by the authorities to control inflation," she said.

First Capital Bank's company secretary, Sarudzai Binha partly blamed the deteriorating situation on the Russia/Ukraine war which has left the entire globe in distress.

She however acknowledged the stance taken by the regulator in containing spiralling inflationary pressures.

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