Many governments routinely pay out more than they receive, technically making their accounts empty, said Harare economist John Robertson. To fill that gap, they rely on domestic and international borrowing to which Zimbabwe has little access after years of political turmoil and economic meltdown, he said.
January is traditionally a lean month for households in Zimbabwe after festive holiday spending and school fees needing to be paid at the start of the school year.
Zimbabwe’s world record inflation in 2008 wiped out savings held by ordinary people that were used to make ends meet, pay family expenses and that bolstered the local money market with cash that could be borrowed, Robertson said.
A black empowerment program also scared off foreign investment and capital inflows that could have made a difference to the state’s liquidity.
“It is clear tax revenues have been limited this month but I don’t think it’s anything new. It has been like this before,” Robertson said.