Dollar now less that 1 cent in 1990


The purchasing power of the Zimbabwe dollar fell by nearly two-thirds last year and today’s dollar is less than one cent its value in 1990, NMBZ Holdings says in its latest report.

The bank says the country was bedeviled by high inflation and a shrinking economy which saw it decline for the fourth consecutive year last year.

Inflation which stood at 116.7 percent in January ended the year at 198.9 percent. The hyperinflationary trend was driven mainly by high money supply growth and a depreciating currency.

Money supply started the year at 57 percent, surging to 148.9 percent in November and was expected to end the year at around 170 percent.

Gross domestic product was expected to decline by11.9 percent with agriculture declining by 20.8 percent, construction by 10 percent, manufacturing by 7.2 percent and mining by 7 percent.

With international isolation, the country had also resorted to the domestic market for funds. Domestic borrowing increased from $205 billion in December 2001 to $346 billion at the end of December.

A staggering 96 percent of the debt was in treasury bills.

Weak export performance had also seen the balance of payments position deteriorate.

Exports are estimated to have fallen from US$1.57 billion to US$1.4 billion.

Major declines were in gold, 25 percent; tobacco, 17.1 percent; and pure manufactures, 8.7 percent. Revenue from tourism declined from US$59.3 million in the first nine months of 2001 to US$42.6 million during the same period last year.

The current account is estimated to have ended the year with a deficit of US$800 million.

The country’s foreign payment arrears are forecast to have ended the year at over US$1.5 billion, up from US$700 million the previous year.

On the positive side, the Zimbabwe Stock Exchange ended the year with 77 listed companies.

Market capitalisation grew by 139 percent to $866.8 billion. The key industrial index increased by 157 percent.

NMBZ itself did well during the year with profit attributable to shareholders nearly doubling from $2.71 billion to $5.4 billion in inflation adjusted terms.

It soared from $1.8 billion to $9.6 billion in historical terms. Net interest income increased from $1.1 billion to $8.7 billion while income from investment activities soared from $2.7 billion to $16.7 billion.

Net operating income increased from $4.1 billion to $20 billion.

Its balance sheet grew from $27.9 billion to $84.8 billion. There was a damper in the company’s performance, however.

Two former executive directors of its subsidiary, Continental Securities Trading, were expelled from the stock exchange. They are contesting the expulsion. The bank, however, says they were not directors or employees of NMBZ.

Though it contributed negatively to group attributable profit, the bank says a replacement broker had been appointed and the temporary lapse of broking activities should have no material impact on the group’s financial position.


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Charles Rukuni
The Insider is a political and business bulletin about Zimbabwe, edited by Charles Rukuni. Founded in 1990, it was a printed 12-page subscription only newsletter until 2003 when Zimbabwe's hyper-inflation made it impossible to continue printing.


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