No cheer as Zim economy stumbles
Investor concerns on IMF snub
THE CLOSURE of 838 Zimbabwean companies this year has cast a dark shadow over the country’s struggling economy, but there was little or no indication that the concerns of investors and key development partners such as the International Monetary Fund (IMF) were being heeded, with 92 percent of the $4.1 billion (R45bn) budget for next year going on government expenditure.
Meanwhile, on the streets of Harare – riddled with potholes, buildings being demolished to pave way for fashion boutiques as well as food outlets and vendors jostling for space to sell vegetables, toys and other foodstuffs – signs of rising unemployment and an economy on its knees are evident.
Analysts say President Robert Mugabe’s Zanu-PF lead government has failed the country’s economy, just over a year after winning a fresh mandate to bring economic respite to the crisis-ridden southern African country.
Such is life in Zimbabwe these days, even as the country’s populace faces a bleak festive season, with only a few companies in a position to pay salaries on time, let alone pay bonuses.
“It’s just back to zero. There is no sign of any policy that will help steady the ship except the pledge to lower mineral royalties and reducing the excise duty on beer. The government won’t listen to anyone and indigenisation is still a major talking point for investor decision-making,” economic analyst Johannes Kwangwari told Business Report yesterday.
The government is expecting to collect $4.1bn in revenues next year, but has projected it will spend about $4.115bn. It is expecting an additional $394 million in assistance from development partners while loans and advances to the country could give it additional respite of about $552m.
However, experts said Mugabe’s government continued to ignore advice by the IMF to cut its expenditure, with about 92 percent of revenues likely to be spent on state recurrent expenditure such as wages and salaries for civil servants.
“A stable macro-economic environment, coupled with planned investments in agri- culture, mining, communication and other infrastructural projects, including power generation and housing, will among others, spur growth, forecast at about 3.2 percent next year,” Chinamasa said during his budget presentation on Thursday.
He added that Zimbabwean exports, a sector that had struggled because of reduced industrial capacity having sagged to 36.3 percent, would grow by a lowly 5 percent next year, with imports projected to decline from $6.15bn to $3.83bn after the government instituted import restrictions to boost domestic demand and help protect local producers against their better capacitated peers mainly from South Africa and China.
Mining was set to rebound in 2015, driven by growth in nickel, gold, chrome and coal. The tourism sector – which is expected to receive 2.1m visitors in 2015 – has been projected to be a major contributor to the country’s gross domestic product.
While these sectors are set to provide some cover for the expected overall decline in the economy, Zimbabwe is still crippled in its bid to borrow money to finance growth and infrastructure developments, as it has a debt overhang of about $9bn, according to Chinamasa. Analysts and experts have taken a dim view of the country’s ability to turn around the economy.
Former Zimbabwe finance minister Tendai Biti said Chinamasa had merely exercised the formality of announcing a fiscal policy statement for the coming year. He failed to see any value in the policy statement.