Budget unlikely to impress: analysts

Zimbabwe's 2012 budget to be unveiled today is unlikely to make an impact on investor and business confidence, which is being battered by the deepening political crisis and economic stagnation, analysts said this week.

Biti
Biti

"It is going to be very difficult for the government to come up with a national budget that will grow the economy, because a lot has gone wrong and the damage cannot be resolved in one year," said Takunda Mugaga, a senior economist. "It will be very difficult for any budget to restore confidence without the government addressing the fundamental problems, like the rule of law and so on.”

Zimbabwe's economic stagnation is manifesting itself in stable inflation, mainly because of the adoption of the US unit, and an acute foreign currency shortage.

The Zimbabwe crisis has deepened as supporters of Mugabe's ruling Zanu (PF) party are intensifying invasions of the remaining farms in support of the land seizure programme.

"Without the financial support of external forces like the IMF, I don't see how Biti can come up with a budget that effectively deals with perennial problems like debt and the foreign exchange shortage," said an economist at Kingdom Financial Holdings.

The IMF said last month Zimbabwe needed to trim its bloated civil service and institute spending cuts, clarify the indigenisation policy to restore business confidence.

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