Zimbabwe’s trade deficit and proposed export incentives through bond notes

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Trade deficit in 2016 as of August is   US$ 1 821 341 980,00 based on figures available on the Zimstats website and l have projected the trade deficit to end the year at US$2 717 744 484,00. The monthly exports are averaging US$175 000 000,00 whilst imports are averaging US $400 000 000, 00 every month. If the government were honest to issue bond notes in December for instance in relation to exports the 5% will only amount to US 8 794 968,70 and probably at most US$ 10 000 000, 00 including the 5% earnings on remittances. Contrary to the realistic figures the government is planning to introduce at least 75 000 000,00 of bond notes upon the introduction which testifies bond notes are not going to be issued in relation to the amount of exports. I have projected 2016 exports to end at US$ 2 211 313 340,00 which will not change much in 2017 assuming they slightly increase in  2017 say to US $2 312 879,00, the amount of bond notes which should be released into the market by end of 2017 should only be US $115 643,95.  The current figures and economic fundamentals will require the US$200m worth of bond notes to be reached only by end of 2018. These figures and the corresponding increase in exports is not enough to cover the current foreign currency shortages.


 It is not realistic to inject US$200m into an economy and expect your exports to grow by US$4billion from around US$2billion to around US$6billion in one year or two. In any way if ever our exports are supposed to grow at such an exponential rate the RBZ should have advised that the incentive system for exports and remittances is only to be given in 2017 as the country will hit the US$4 billion mark as a combined total of exports and remittance, which gives the maximum US$200m i.e. the 5% incentive. Which would mean if bond notes were transparent they should just be issued in a year and no more will be issued thereafter, but the proposition and policy from Reserve Bank of Zimbabwe does not say so, the incentive system remain indefinitely which imply if ever we are to increase our exports to US$6billion as they have proposed it will mean each year an average of US$300m worth of bond notes should be introduced into the economy to cover the 5% incentives to exporters and for remittances.






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