Dif­fi­cult choices a must for eco­nomic turn around

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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.

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