The government intends to clear the foreign currency backlog at the auction system within a month-and-a-half, Secretary for Finance and Economic Development George Guvamatanga has said.
Guvamatanga said this while speaking at the post-Mid-Term Budget and Economic Performance Review hosted by Business Weekly in partnership with Zimpapers Television Network (ZTN) and the Confederation of Zimbabwe Industries (CZI).
Although Guvamatanga did not specify the amount involved, former Monetary Policy Committee member Eddie Cross is on record saying the backlog is approximately US$200 million.
He said with inflation coming down and production growing, the exchange rate should be strengthening. Said Guvamatanga:
We would want to assure the market that within the next 30 to 45 days we will clear the backlog that is there in the auction system. We know what it is and it is very much manageable.
What we receive on a monthly basis is very much adequate to support industry growth and demand for foreign currency.
Guvamatanga said the local banking sector is now sitting on US$1.7 billion in foreign currency deposits which banks are failing to utilise. He said:
We have banks today who are sitting on 50 per cent of their deposits which they are not lending, so the ecosystem is actually disrupted because we have US$1.7 billion sitting in foreign currency accounts which is not circulating in the economy.
So if banks were lending that money, the companies which are currently coming to the auction would stop coming to the auction and that would actually complete the ecosystem of the economy.