IMF: Zim economy buoyant, more reform needed

Zimbabwe’s economy will grow for the second successive year in 2010 due to positive policies and strong commodity prices, the International Monetary Fund (IMF) said on Monday, while calling for more reforms to sustain the recovery.

The Southern African country’s economy, battered by hyperinflation that reached 500-billion percent in 2008, grew 5,7% in 2009 — the first time in a decade — under a power-sharing government set up by bitter foes President Robert Mugabe and Prime Minister Morgan Tsvangirai.

An IMF team that visited between October 25 and November 3 for routine discussions with the government and the private sector said Zimbabwe would have a budget surplus this year, among other signs of improved economic conditions.

“Supported by renewed efforts to strengthen policies and favourable shocks, the Zimbabwe economy is completing its second year of buoyant economic growth after a decade of economic decline,” the IMF said.

“The budget is projected to generate a cash surplus in 2010, governance at the Reserve Bank of Zimbabwe is improving, and the government is working toward strengthening the business climate.”

The IMF has projected the economy to grow by 2,2% in 2010, while Finance Minister Tendai Biti says it is on course for 8,1% growth this year and 10% in 2011.

The IMF said there should be more funding for infrastructure and social needs in the 2011 budget and recommended that the government cap cash budget expenditure at $2,5-billion.

Higher gold and platinum prices have boosted exports and government revenues in 2010, while favourable weather conditions contributed to higher agricultural output.

Analysts have said Zimbabwe’s shaky coalition government, which has squabbled over key government appointments and the pace of reforms, was holding back the pace of recovery.

“Political stability is also key to consolidating gains in macroeconomic performance,” the IMF said, adding that more reforms were needed to realise potential.

“Priority areas include reducing labour market rigidities, establishing security of land tenure, clarifying ownership requirements under the indigenisation legislation, and addressing concerns about governance in the diamond sector.”

The IMF also said strict regulation had seen risks in the banking system easing since the beginning of 2010. It added that aid to Zimbabwe, which owes multilateral finance institutions nearly $7-billion, would remain limited to technical assistance. — Reuters

We make it make sense

If this story helped you navigate your world, subscribe to the M&G today for just R30 for the first three months

Subscribers get access to all our best journalism, subscriber-only newsletters, events and a weekly cryptic crossword.”

Related stories


Already a subscriber? Sign in here


Latest stories

SAA sale is above board, says Gordhan

The public enterprises minister has said there have been deliberate attempts to undermine the transaction, which is aimed at rehabilitating the airline

More sabotage at Eskom as Hendrina power station cable is...

Public Enterprises Minister Pravin Gordhan says the saboteurs are ‘obviously’ people working at facility

OPINION | What will power Mthethwa’s erection?

Since Eskom’s a no-go, perhaps our Minister of Monuments’ R22-m flag will be powered on arrogance and self-belief alone

Shutterland: photographers’ journeys through everyday life in South Africa

Through their lenses, 22 South African photographers tell personal stories that show how life in South Africa is built on duality

press releases

Loading latest Press Releases…