Zim budget unlikely to ease economic crisis

Zimbabwe’s embattled government will present its annual budget this week with a traditional prayer for salvation, but analysts say the plan is unlikely to ease a crisis savaging the economy.

Finance Minister Herbert Murerwa will unveil the 2007 budget in Parliament on Thursday for an economy that has shrunk 40% in the last six years.

Economic analysts are not expecting much from Murerwa, who traditionally ends his budget speeches with a plea to God to help save the country, and President Robert Mugabe’s government has widely missed all its major targets in the current budget.

”I don’t think anyone is expecting a miracle,” said private economic consultant John Robertson. ”On their record, this is another number-crunching exercise, which will be delivered with a lot of promises and a lot of hot air,” he told Reuters.

Inflation — which the government had hoped to bring down to 80% by this December from over 400% a year ago — has shot up to 1 070,2%. The International Monetary Fund sees it climbing to over 4 000% in 2007.

The budget deficit, initially forecast to dip to 4,6% of gross domestic product (GDP) from 5% in 2005, is also likely to be way off target after the government adopted a supplementary budget in July, three times the size of the original 2006 budget, citing run-away inflation.

Forecasts that the economy — whose GDP has been shrinking since 1998 — would grow up to 3,5% in 2006 have since been revised downwards to 0,3% to 0,6% percent growth. Analysts see another contraction in Zimbabwe, which the World Bank says has the fastest shrinking economy outside a war zone.

Doomed

Robertson said the economy was doomed if the government did not address fundamental structural problems, including committing itself to respecting private property rights.

Critics say a once-thriving economy has been brought to its knees by skewed state policies, including the seizure of land from white commercial farmers to redistribute among blacks, a programme they say has wrecked the key agriculture sector.

The country is also suffering chronic shortages of foreign currency, fuel and food, and massive unemployment.

Mugabe (82), in power since independence from Britain in 1980, says the economy is a victim of sanctions by those opposed to his nationalisation of white-owned farms. — Reuters

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