HARARE Zimbabwes current political stalemate may force government to revise economic growth forecast downwards from 7.7 per cent to 4.8 per cent. (Pictured: Biti may be forced to revise economic growth forecasts.)
Finance Minister, Tendai Biti, said last week that political uncertainty had kept away foreign donor support.
Donors had so far provided only US$2.9 million to finance a US$810 million budget deficit as the international community remains skeptical of the February 2009 power-sharing government between, President Robert Mugabe, and Prime Minister, Morgan Tsvangirai.
“If this slow off-take persists, then we may have to revise our growth target to about 4.8 percent. We are not doing this now, but will make a definitive statement in the mid-year budget review,” Biti told reporters in Harare.
Zimbabwes economy may have turned a corner last year when it grew by 5.1 percent compared to an earlier projection of 4.7 percent, but full recovery could be clouded by political disputes between Mugabes Zanu (PF) party and Tsvangirais MDC that are holding back badly needed foreign investment and donor support.
The two parties are involved in talks under the supervision of South African President, Jacob Zuma, who is the South African Development Community (SADC) mediator in the crisis, to resolve outstanding issues from their 2008 global political agreement (GPA) that set up the coalition.
Biti, said, Zuma, who last week received a report on the progress of the Harare political talks must be allowed to complete his mediation, warning that failure to finalise the GPA was also affecting the economy.
We must all speak with one voice in terms of the political issues that are affecting Zimbabwe. We must respect the GPA and let President Zuma be allowed to finish his job to help us remove the high political risk factor and correct that perception. The economy is still fragile, limping, but I think we will sprint in the second half of the year, said Biti.
Notwithstanding the prevailing macroeconomic stability and the anticipated positive economic performance, the economy is facing a number of downside risks, with potential to reverse some of the gains realised to date as well as sustainable quick recovery of the economy. There is perceived high risk factor around the political settlement, he said.
Tsvangirai accuses Mugabe of delaying democratic reforms that many Western donors say are necessary before they can bail out the country with funds needed to resuscitate the country’s economy. In addition Tsvangirai also wants Mugabe to reverse the unilateral appointments of the country’s Attorney General and Reserve Bank of Zimbabwe (RBZ) governor as well expediting the appointment of senior officials of his party into government including his choice of deputy agriculture minister Roy Bennett who is facing terrorism charges.
Zanu (PF), on its part accuses Tsvangirai of campaigning for the imposing of sanctions and wants the Prime Minister to call on Western countries to lift the visa and financial sanctions on Mugabe and his inner circle.
Analysts say Zimbabwes economy needs to grow by an average 15 percent for the next five years to generate employment but without foreign investment, this could be a big ask.
Many foreign investors are eager to set shop in Zimbabwe but this is unlikely to materialise any time soon especially after the global economic crisis last year that saw foreign funds take flight from risky emerging markets.
Post published in: Agriculture