OWN CORRESPONDENT, Harare | Tuesday
PRESIDENT Robert Mugabe’s government should urgently put in place an austerity programme to boost Zimbabwe’s parlous foreign currency reserves, and reverse economic decline, a business leader said this week.
Economic shrinkage is projected at 4.2% this year, Zed Rusike, head of the Confederation of Zimbabwe Industries (CZI), said in a statement.
Rusike said many local companies were faced with collapse due to a crippling foreign currency shortage which has persisted for over a year, hobbling key imports.
”The casualties of foreign currency continue to mount by the day as companies are closing due to lack of essential inputs,” Rusike said, estimating that some industries imported up to 95% of their manufacturing inputs.
In October Finance Minister Simba Makoni said the country, currently undergoing its worst economic crisis since independence from Britain in 1980, was living from hand to mouth.
”The government should move with speed to put in place an austerity programme (which) will involve putting together an economic recovery programme that will be acceptable to international donors,” Rusike added.
Western donors led by the International Monetary Fund have over the past year suspended key aid to Zimbabwe over policy differences with Mugabe, mainly his costly military foray into the Democratic Republic of the Congo war and his controversial plans to seize white-owned farms.
Analysts say only a resumption of donor aid can arrest the hard currency squeeze which has hobbled key inputs, including that of fuel which has been in erratic supply since December 1999.
A recent CZI survey showed that most Zimbabwe manufacturers were operating at about a quarter of full capacity while 23% of local manufacturing firms were disinvesting from a country where unemployment has soared to over 50%. – Reuters
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