By Alois Vinga
THE Reserve Bank of Zimbabwe (RBZ) has paid out US$2, 95 billion to Foreign Currency Accounts (FCAs) during the first half of this year signifying a sustained commitment to protect depositors’ funds and strengthen banking sector confidence.
Presenting a report on foreign exchange payments for the first six months of 2022, RBZ governor John Mangudya revealed that a significant amount was paid out in respect of FCA’s.
“Foreign exchange payments for the half year period amounting to US$3,78 billion were broken down as follows: foreign currency accounts US$2,95 billion and the interbank market US$87,7 million,” he said.
An analysis of FCA payments shows an increase in the category given that between June 2020 and July 2021 a total US$1,84 billion was paid out.
In the period between January 2021 to December 2021, a total US$4,4 billion was paid out to FCAs.
Presenting the first half’s report, RBZ governor John Mangudya said during the period, companies received extensive support enabling them to meet core productivity needs.
During the month of June 2022 alone, 72% of the auction’s allotments supported raw materials imports machinery and equipment, with the remaining 28% of the total allotments going towards payment for consumables.
Economist Doctor Prosper Chitambara described the increases in FCA payments as a reflection of confidence in the banking sector on the back of increased usage of foreign currency.
“I think the quantum of FCAs payments signifies surging confidence in the banking sector built through the ease experienced by members of the public in accessing their deposits over time. As it stands, the FCA payments are poised to surpass the all- time record since the inception of the Auction system.
“The trends also signify increased usage of the US$ in the economy on the back of inflationary pressures,” he said.
Top economist, Persistence Gwanyanya described the auction system as a dependable source of foreign currency.
“What is clear from the statistics by the RBZ on foreign currency payments and allocations is that the auction system has been doing very well as an allocation mechanism. It is debatable however whether the same can still be said about the price discovery.
“This is because of the structure of the economy which is concentrated in the hands of a few and behavioural tendencies of speculation and trying to take advantage of arbitrage opportunities as they present themselves in the economy today,” he said.
The central bank also revealed that US$740,7 million was disbursed through the auction platform and an additional US$87,6 million through the interbank market during the first half.
The first six months of the year saw 505 beneficiaries receiving US$84 million under the Main Foreign Exchange Auction during the month while another 1 565 beneficiaries of US$16 million allotted under the SMEs category.
Total cumulative foreign exchange auction allotments since inception of the Foreign Exchange Auction System stand at US$3,3 billion.