Govt economic policies prudent: AfDB
THE fiscal policies that Government is implementing are prudent and should see the country report strong economic growth rates for the year 2019 and 2020, the African Development Bank said in its African Economic Outlook 2019 report released last week.
Since his inauguration following the July 30, 2018 general elections, President Mnangagwa has prioritised economic growth and development that should see Zimbabwe attain upper middle income status with a per capita income of over $3,500 by 2030.
It is in that spirit that Finance and Economic Development Minister Mthuli Ncube and his team, crafted the Transitional Stabilisation Programme (TSP), with the aim of making sure policy reform initiatives of the new dispensation stimulate domestic production, exports, rebuild and transform the economy in line with vision 2030.
According to the policy document, the TSP is focusing on stabilising the macro-economy, and the financial sector; introducing necessary policy and institutional reforms to translate to a private sector-led economy; addressing infrastructure gaps, and launching quick-wins to stimulate growth.
The TSP was recently described by American credit rating agency Moody’s Investors Service as a high-level plan which includes programme — implementation architecture and a relatively detailed set of implementation matrices.
And in agreement, the African Development Bank (AfDB) has said the Zimbabwean Government “has adopted and is implementing prudent fiscal policy underpinned by adherence to fiscal rules, as enunciated in the Public Finance Management Act, together with financial rules.”
“The reforms also reprioritise capital expenditure through commitment to increase the budget on capital expenditures from 16 percent of total budget expenditures in 2018 to over 25 percent in 2019 and 2020,” reads the AEO’s 2019 Report.
Such adherence to fiscal rules together with financial rules is already bearing fruit, if the first two months of the measures are anything to judge by.
In October 2018, the economy achieved a budget surplus of $29 million, the first time in many years. This positive showing follows another significant decline in the budget deficit in the previous month of September when the budget deficit was approximately $19 million, down from $651 million in August and lower than the targeted $99,9 million.
It is against this background that the AfDB is forecasting Zimbabwe to record a 4,2 percent GDP growth this year and 4,4 percent in 2020.
The growth rate is higher than Government’s 2019 growth projection of 3,1 percent and the World Bank’s projection of 3,7 percent.
“The agricultural sector and mining are expected to be the main drivers of growth, backed by increased public and private investment.
The regional bank, however, called for increased investment if the country is to realise significant growth.
“Zimbabwe has opportunities requiring minimal additional investment to realise medium-term growth targets.
“In particular, measures are needed to increase transparency in the mining sector, strengthen property rights, reduce expropriation concerns, control corruption, and liberalise the foreign exchange markets.”
The AfDB said Zimbabwe could also benefit from trade within the continent, given the vast natural resources, relatively good stock of public infrastructure, and comparatively skilled labour-force.