The steady decline of Zimbabwe’s economy that began four years ago is to continue with real gross domestic product set to fall by up to 12% this year and seven percent in 2003, the Reserve Bank of Zimbabwe said on Wednesday.
A foreign currency shortage that has drastically reduced the production of goods and services for local consumption and export ”has made it difficult to meet external obligations”, said bank governor Leonard Tsimba in a monetary policy statement.
Current food shortages — brought about by the drought affecting six southern African countries and also blamed on Zimbabwe’s chaotic land reform — will necessitate the diversion of scarce foreign exchange to import food, he said.
As of mid-November, external payment arrears stand at $1 319-million and are expected to peak at $1 395-million by year end, he added.
Tsimba said inflation, which stood at 144,2% in October this year ”is projected to remain high for the remainder of 2002 and beyond”.
The balance of payment deficit is supposed to hit an all-time high of $847-million in 2003, the governor said.
The Zimbabwean economy, second to that of South Africa in the southern African region, is not expected to recover until the Bretton Woods bodies resume lending and providing balance of payment support, both of which are suspended at the moment. – Sapa-AFP