Zimbabwe has released figures which blame exporters for exacerbating a dollar shortage, warning the power utility against fuelling inflation as the state grapples with a mounting economic crisis.
The country is gripped by a severe dollar crunch, a tumbling local currency and mounting inflation, which hit 75.86% in April.
Anger over fuel and medicine shortages triggered violent street protests in January and has piled pressure onto the government of President Emmerson Mnangagwa who had promised to revive the economy after the fall of Robert Mugabe.
Treasury official, George Guvamatanga pointed the finger at exporters, accusing them of keeping $900 million of their earnings in offshore banks – money that he said should be repatriated to ease the dollar shortages and help stabilize the exchange rate.
At the same parliamentary hearing, Finance Minister Mthuli Ncube warned state power utility, ZESA Holdings against hiking rates, saying it would add to inflation and hit customers already angered by an increase in outages.
The crisis and worries of further unrest have undermined Mnangagwa’s efforts to win back foreign investors who left under Mugabe -whose 37-year rule ended in a coup in November 2017.
On Monday, the local RTGS dollar was trading at 5 to the U.S. dollar compared to 5.5 on Friday. On the black market, the unit was weaker at 7.50 versus 7 on Friday, traders said.
The new currency has lost 50 per cent of its value on the interbank market since it started trading on Feb. 22.
Guvamatanga, permanent secretary for ministry of finance says $500 million out of last year’s $4.3 billion export earnings is still being kept offshore.
“There is $1.7 billion that should be available in this economy to pay for the pharmaceuticals, to pay for the fuel and all the requirements we need as an economy”, he adds.
Exporters have 90 days to repatriate earnings to the country, but some of them take longer.
Zimbabwe, last week, hiked fuel prices by around half, the second sharp rise in four months, a day after the central bank effectively removed a subsidy by ending oil importers’ access to U.S. dollars at a favorable rate.
State power utility, ZESA said last month, it had applied to the energy regulator to raise its tariff by 30 per cent for maintenance of its grid and after the price of diesel and other inputs went up.
Ncube told the parliamentary committee although electricity was still cheaper compared to regional peers, at 2.5 U.S. cents per kilowatt hour, any further tariff increase would hit consumers hard.
“Any ill-advised sharp tariff rate increase combined with the power outages will be most unpopular and unwelcome and will certainly trigger another round of price increases and inflation,” Ncube said.