Remittances up 27%

LIVINGSTONE MARUFU

Zimbabwe’s international remittances rose 27% to US$629.6m in the first quarter of the year from US$493.9m recorded during the same period last year thereby bolstering foreign currency inflows, central bank governor John Mangudya said yesterday.

Mangudya said of the total amount, diaspora remittances jumped 29% to US$388m as at March 31 2022, compared to US$300.7m  during the same period  last year.

He said international remittances received through formal banking channels on behalf of international organisations increased 25% to US$241.6m during the quarter from US$193.1m  during the comparative period.

The inflows are Zimbabwe’s second-biggest source of foreign-exchange earnings, after revenue from platinum exports.

“An analysis of yearly trend reflects a significant increase in diaspora remittances in year 2022 compared to 2021, this may be due to an increased use of  formal channels of sending money back home  due to Covid-19,” Mangudya said.

In January this year inward remittances were US$117.5m  against US$81.9m last year. In February remittances were US$128.2m compared to US$93.4m in the same month last year  while March remittances rose 13% to US$142.2m from US$125.3m.

Despite the increase in remittances, the economy  is grappling with increasing inflation and volatile exchange rate resulting in sharp spikes in prices of goods and services.

At its meeting last week, the central bank’s Monetary Policy Committee noted with concern the recent uptick in month-on-month inflation to 15.5% in April 2022 from 7.7% in March and the increase in annual inflation to 96.4% in April 2022 from 72.7% in March.

“The increase in inflation was as a result of a combination of global shocks and the pass-through effects of the recent exchange rate depreciation on the parallel market, with a significant proportion of the inflationary pressures emanating from the impact of the on-going Russia-Ukraine conflict,” Mangudya said in a statement this week.

Zimbabwe’s forex inflows went up 16% during 2022 first quarter of 2022 compared to the same period last year.

“The positive trend in foreign currency generation has seen the country realising US$2.4bn in foreign currency receipts during the first quarter of 2022, an increase of 15.9% compared to foreign currency received during the same period in 2021,” Mangudya said.

The foreign currency receipts were against foreign payments of US$1.8bn, leaving a surplus position of US$1.9bn in foreign currency accounts and national reserves.

Analysts argue that this forex surplus should be used to tame rampant inflation in the economy.