Treasury projects US$1.2 billion current account surplus despite economic challenges

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By Alois Vinga

TREASURY has projected a US$1.2 million current account surplus on the strength of the country’s exports coupled with capital inflows.

The current account records a nation’s transactions with the rest of the world – specifically its net trade in goods and services, its net earnings on cross-border investments, and its net transfer payments – over a defined period of time, such as a year or a quarter.

Addressing the media this week, Finance Minister Mthuli Ncube said there were strong indications pointing to the achievement of that figure.

“The US$1.2 billion current account surplus will be achieved on the strength of the country’s export growth from mining, manufacturing, cotton and tobacco among others.

“We have also registered a 33 % increase in the diaspora remittances, and these will also go a long way in driving the surplus,” he said.

Quizzed on the predictability of achieving the figure against a background of the effects of the Covid-19 pandemic which has left developed economies in the negative, Ncube said the situation in Zimbabwe was unique.

“Our context is different. Companies in some neighbouring countries have been forced to close down due to the pandemic’s effects. This trend has been witnessed in South Africa, United States of America among others,” he said.

The treasury boss said a comparison of all global countries showed the impact has not been the same hence the need to appreciate the positives within the Zimbabwean economic context.

A positive current account with a surplus means the country is a net exporter and negative means it is a net importer of goods and services.

The current account surplus comes on top of budget surpluses recorded since January 2019 which cumulatively stood at $395.5 million realised by December 2019 and another surplus of $800 million was realised for the period January to June 2020.

However, critical economists have questioned the feasibility of recording budget surpluses arguing that the country is failing to meet several pressing basic needs and in some instances, relying on donor support to keep going.