Econ­omy to grow nearly 5pc in 2017

Chronicle (Zimbabwe) - - Business - Harare Bureau

ZIM­BABWE’S econ­omy is pro­jected to re­bound from the slug­gish 1,2 per­cent growth ex­pected this year to a steely 4,8 per­cent driven by a cock­tail of re­forms and pos­i­tive ex­ter­nal fac­tors.

The 2016 eco­nomic growth rate was re­vised to 1,2 per­cent dur­ing the mid-term fis­cal pol­icy re­view from the 2,7 per­cent forecast ear­lier this year on ac­count of poor agri­cul­tural per­for­mance due to drought and sub­dued global com­mod­ity prices. Cur­rent de­fla­tion­ary trends are ex­pected to con­tinue un­til year end, but in­fla­tion is seen higher at 1,1 per­cent in 2017 due to pro­jected higher fuel prices and stronger ag­gre­gate demand.

Ac­cord­ing to the 2017 Na­tional Bud­get Strat­egy Pa­per de­vel­oped by the Min­istry of Fi­nance and Eco­nomic De­vel­op­ment, pro­jected growth is an­chored in fun­da­men­tal eco­nomic as­sump­tions that in­clude im­proved per­for­mance of agri­cul­ture.

Me­te­o­ro­log­i­cal and cli­mate change ex­perts for SADC have forecast nor­mal to above nor­mal rain­fall in the next rainy sea­son, a pos­i­tive phe­nom­e­non for Zim­babwe’s agri­cul­ture driven econ­omy. Pro­jec­tions say growth will also de­pend on in­creased fi­nanc­ing for agri­cul­ture, in­cen­tives for ex­porters, bet­ter min­eral prices, im­proved in­vest­ment cli­mate, re-en­gage­ment with In­ter­na­tional Mon­e­tary fund and other global fun­ders and pos­i­tive gains from mea­sures taken to cush­ion lo­cal in­dus­try.

Ex­ports are pro­jected at $3,8 bil­lion, against imports of $5,4 bil­lion, re­sult­ing in a high un­sus­tain­able trade gap of over $1,5 bil­lion.

Govern­ment says in line with the value ad­di­tion and ben­e­fi­ci­a­tion thrust, im­port re­stric­tions will re­main nec­es­sary, while in­sti­tut­ing ap­pro­pri­ate mea­sures that pro­mote pro­duc­tion for both the do­mes­tic and ex­port markets will be crit­i­cal. The bud­get strat­egy pa­per says that a num­ber of mea­sures will be re­quired in 2017 to stim­u­late growth in pro­duc­tive sec­tors.

This will en­tail fur­ther sup­port mea­sures to min­ing through re­view of the fis­cal tax­a­tion regime, ca­pac­i­tat­ing Fidelity Print­ers and Re­finer­ies to buy more gold, equip­ping small scale min­ers, value ad­di­tion of min­er­als, con­clud­ing con­sol­i­da­tion of the di­a­mond min­ing sec­tor, re­cap­i­tal­i­sa­tion and re­struc­tur­ing of Hwange to fo­cus on coal min­ing and real­lo­ca­tion of chrome claims un­der ZIMASCO to en­hance pro­duc­tion.

Na­tional bud­geted rev­enues, which were re­vised to $3,8 bil­lion in the midterm fis­cal pol­icy re­view due to weak per­for­mance of most rev­enue heads, are pro­jected at $4 bil­lion in 2017. The strat­egy pa­per says pub­lic em­ploy­ment costs will con­tinue to be dis­pro­por­tion­ately high in re­la­tion to bud­get rev­enue.

“Clearly, fis­cal space re­mains con­strained, high­light­ing the ur­gency for im­ple­men­ta­tion of the Cab­i­net thrust to con­tain and ra­tio­nalise re­cur­rent ex­pen­di­tures, pre­dom­i­nantly re­duc­tion of em­ploy­ment costs. This al­lows for scope in­creases to­wards in­creased pri­or­ity de­vel­op­ment pub­lic ex­pen­di­tures.”

Against this back­ground, the Min­istry of Fi­nance says Govern­ment min­istries should make sub­mis­sions for bud­get al­lo­ca­tions fo­cus­ing on pro­grammes that main­tain cov­er­age and qual­ity of pub­lic ser­vices and on­go­ing ZimAs­set projects.

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