Difficult choices a must for economic turn around
From Page 8
“This is why we have said within the next 12 years, that is, by 2030, 12 years from now, with the programmes we have in agriculture, mining, tourism, infrastructure development, ICT and manufacturing, Zimbabwe will be a middle-income country . . . All the programmes we have, generation of power with all those things taking place, we have no doubt, I have no doubt, the current dispensation has no doubt that by the year 2030 we would have transformed this country into a middle class economy.”
And as testimony to that President Mnangagwa and his Government are keen to improve the quality of life for all Zimbabweans by attending to economic fundamentals, Cabinet last week approved for immediate implementation the Transitional Stabilisation Programme announced by Finance and Economic Development Minister Professor Mthuli Ncube. Addressing journalists, Information, Publicity and Broadcasting Services Minister Monica Mutsvangwa said Cabinet deliberated on the measures after a presentation by Prof Ncube before adopting them. “The implementation process will accordingly commence this month and run up to December 2020,” said Minister Mutsvangwa, and the launch of the programme was held on Friday.
The programme’s main thrust is to ensure the stabilisation of the macro-economic environment that include the financial sector, introduction of necessary policy and institutional reforms to facilitate private sector led economic growth and the launch of quick win projects and programmes to stimulate economic growth.
The programme entails that adoption and implementation of prudent fiscal and complementary monetary policies will anchor return of investor confidence lost over the past two decades, stabilising the macro-economic environment, which is conducive for opening up to more business. Private sector is expected to play a key role, with Government providing an enabling environment, with focus on value addition and beneficiation to realise high value exports and cushioning the economy from the vagaries of international commodity price fluctuations associated with over dependence on export of raw commodities, said President Mnangagwa, prefacing the programme.
“Implementation of the quick win projects and programmes will be undertaken in 100 Day Cycles guided by the Rapid Results Approach. The Transitional Stabilisation Programme constitutes the first phase of the implementation of the Vision 2030 and will thus pave way for the implementation of two successive Five Year Development Plans which are to run from 2021 to 2030,” said Minister Mutsvangwa.
Key features and objectives include addressing various existing and external and macro-economic imbalances, thus providing a foundation for robust economic growth and development beyond 2020. They also include strengthening fiscal responsibility and management of Government expenditures so as to divert resources from recurrent expenditure to productive activities, facilitate innovation in the design and administration of taxes to include simplified tax structures for micro, small and medium enterprises.
Other features include the desire to rationalise the civil service so as to reduce the unsustainable public sector wage bill. Minister Mutsvangwa said Cabinet had also considered the Zimbabwe Investment and Development Bill that was presented by Industry and Commerce Minister, Nqobizitha Ndlovu.
“The Bill is part of current efforts by the Government of Zimbabwe to create a regionally and internationally competitive investment and business environment. More specifically the Bill provides for the establishment of the Zimbabwe Investment and Development Agency . . . The Agency will serve as a One Stop Investment Service Centre with the goal to promote and facilitate quick processing and effective protection of investment.”
In addition, the Reserve Bank of Zimbabwe (RBZ) gave banks until mid this month to create separate nostro (external bank) foreign currency accounts (FCAs) and real time gross settlement (RTGS) FCA accounts in order to attend to the issue of financial discipline and foreign currency shortages.
Monetary authorities expect the measure to strengthen the multi-currency system for financial and price stability and to increase inflows of foreign currency while buttressing Government’s economic reforms started last year. The new policy forms part of measures to boost confidence and transparency in the foreign currency market and rein in inflation by mitigating rent seeking behaviour and mopping up excess liquidity within the economy. In support of these measures and to enhance sanity in the foreign currency market, RBZ Governor Dr John Mangudya said the RBZ was finalising with the Afreximbank for a $500 million nostro stabilisation guarantee facility to provide nostro account holders assurance that foreign currency will be readily available as and when required. The facility will be in place by October 20, 2018.
The central bank is also finalising a $500 million facility to cater for strategic import requirements that include fuel, electricity, cooking oil, wheat, packaging and other essentials such as critical raw materials, medicines, chemicals and equipment. The facility entails $250 million from Germcorp (London), $150 million from Afreximbank, Afrigrain’s $100 million.
“These facilities are over and above the $100 million from CDC (United Kingdom), through StanChat Zimbabwe, $100 from Ecobank, $30 million from IDC South Africa $25 million from ADB through CABS,” he said. RBZ is also negotiating with international financial institutions for medium to long-term funding needed to bring sanity in the foreign currency market and assist in stabilising and growing the economy. This will involve clearing of the country’s $7,5 billion external debt to open up access to foreign lines of credit.
Finance and Economic Development Minister Professor Ncube has said the economy is expected to grow, underpinned by “better-than-anticipated performance” across the key sectors of the economy chiefly agriculture, mining, tourism and manufacturing during the first half of the year.
Nonetheless, Minister Ncube is on record as saying the growth trajectory faces risks and challenges related to foreign currency and cash shortages; unsustainably high budget and current account deficits, emerging inflation pressures, infrastructure deficiencies, and weak social service delivery.
“These challenges are, however, not insurmountable. These challenges call for urgent reforms. It cannot be business as usual. Bold decisions need to be taken on the reforms front in order to stimulate growth and sustainable development,” said Prof Ncube.