The letter also highlighted that the coalition government had made significant progress in stabilising the economy since its formation in February 2009.
“The adoption of the multiple currency system, the introduction of cash budgeting, and the discontinuation of the quasi-fiscal operations of the Reserve Bank of Zimbabwe since 2009 have resulted in strong economic growth averaging about seven and half percent, single-digit inflation below five percent, and a doubling of fiscal revenue collection from 16 percent of GDP in 2009 to an estimated 36 percent of GDP in 2012,” said the letter.
Biti and Gono indicated that the economy continued to operate in a very difficult environment characterised by huge demands on a small national budget, the absence of direct budget support, weak institutional capacity, and very low international reserves.
“Poverty levels remain high and widespread, savings and investment ratios remain low, and formal employment levels and incomes are still low, while the infrastructure gap has remained very high. Social services have also remained inadequate,” read the letter.
It also stated that although the financial sector had rebounded, it was still vulnerable and unstable, especially among the smaller locally owned banks.
“Exogenous factors such as the continued global economic crisis, volatile commodity prices, and the impact of sanctions are also negatively affecting the performance of the economy,” said Biti and Gono.
The pair sees the request for an SMP as a step towards engaging with the international community and dealing with the county’s debt.
Post published in: Business