‘Zimbabwe economy to weaken further’

ZIMBABWE’S economy was expected to weaken further this year after growing by 3.1 percent in 2014, the International Monetary Fund (IMF) said on Monday, while the Zimbabwean finance minister said Harare expected to clear its arrears to the fund in the next year.

The government forecasts growth this year of 3.2 percent, but analysts say weak commodity prices, patchy rainfall this season and company closures as a result of cheap imports and high interest rates will curtail the economy’s growth.

“Growth has slowed down and we expect it to weaken further in 2015,” said Domenico Fanizza, the head of an IMF review team.

He told journalists that Zimbabwe had met all its targets under the programme despite difficult economic conditions.

Zimbabwe’s foreign debt is $9 billion (R108.4bn). It makes token monthly payments of $150 000 to clear $125 million in IMF arrears.

The fund said the government could only gain access to new finance if it cleared its arrears and presented a credible plan to deal with outstanding payments to foreign creditors.

Finance Minister Patrick Chinamasa said within the next year Zimbabwe should be looking at paying off the arrears.

“Our intention is that by this time next year, we should be entering the new phase of clearing our arrears,” said Chinamasa at the same press conference with Fanizza.

Fanizza said Zimbabwe was looking at ways to cut a wage bill that took 82 percent of total government revenues and modify investment laws to attract foreign investors.

Foreign investors often point to the government’s policy of forcing foreign-owned firms to sell a majority of shares to locals as an impediment to investment.