ZIMBABWE – Zimbabwe’s finance minister forecast a 2.7 per cent growth for next year, but analysts fear this is too ambitious, as they project an economic depression.
With commodity prices on a downward trend, Zimbabwe is banking on improved prices for gold and other minerals. But a certain drought, due to poor rains, could paid to any significant economic growth for the African country, whose gross domestic product (GDP) growth is forecast for just above 1 per cent for 2015.
It may actually be heroic to assume that we will grow at 2.7 per cent given that the conditions are actually deteriorating
For the past three years, Finance minister Patrick Chinamasa has presented a budget of about $4 billion, the clearest indicator of a stagnating economy.
Labour economist, Godfrey Kanyenze painted a grim picture of the country’s future. He said expecting the economy to grow in the context of declining commodity prices and a possible drought was too ambitious.
“We may actually struggle to do better than this year. It may actually be heroic to assume that we will grow at 2.7 per cent given that the conditions are actually deteriorating,” Kanyeze told a post budget meeting.
“You cannot expect to reap in the same season that you sow. Structural reforms will take much longer and we may not be able to realise all the benefits in 2016.”
This year, government was forced to revise the economic growth projections from an initial 3.2 per cent to 1.5 per cent, although the International Monetary Fund (IMF) projects the growth rate to be slightly lower. Revenue projections were cut down to $3.69 billion from $3.9 billion, as key sectors floundered.
According to Chinamasa, growth in mining and agriculture are expected to anchor the southern African country’s economic growth next year.
Revenues from tobacco – a top earner of foreign currency in previous years – this season fell per cent to $586.4 million. Mineral earnings for the nine months to September — excluding diamond revenue — dropped 11 per cent to $1.26 billion owing to a decline in commodity prices.
The government now hinges its bets for economic growth on an IMF bailout, but the multi-lateral institution wants Zimbabwe to pay almost $2 billion before it can lend anything to it.
A policy analyst with the National University and Science and Technology, Butler Tambo downplayed prospects of assessing IMF funds. He said it was mind boggling how the Zimbabwean government will all of a sudden be able to pay back $1.8 billion in six months when it was only able to pay back $400.9 million to external funders, translating to $44.5 million per month.
IMF Zimbabwe representative, Christian Beddies insists the lending is dependent on the commitment from government in completing an informal staff monitored programme (SMP), which Zimbabwe has so far religiously adhered to.
The third and final review of the SMP will be done in the first quarter of 2016.