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26 Sep 2012 08:15
Zimbabwe's economy has seen rapid growth over the last two years. (AFP)
Zimbabwe's economy grew at a rapid clip of 9.6% in 2010 and 9.4% last year as the country rebounded from a decade-long recession widely blamed on the policies of long-time President Robert Mugabe.
In its annual review of the Zimbabwean economy, the International Monetary Fund said on Tuesday growth this year should moderate over the medium-term to average at about 4%, although electricity supply problems and tight liquidity conditions could pose problems.
The fund said Zimbabwe's current account deficit was projected to narrow to 20.5% of gross domestic product in 2012, as a spike in imports in 2011 was reversed and exports continued to expand.
It added Zimbabwe carries a heavy debt burden with total external debt estimated at $10.7-billion, or 113.5% of GDP, at end-2011, of which 67% of GDP are in arrears.
"The large debt overhang remains a serious impediment to medium-term fiscal and external sustainability," the fund said.
Two salary increases for civil servants since 2011 raised employment costs by 22%, and was compounded by an increase in employee allowances and unbudgeted recruitment.
With elections expected later this year or next, there are concerns about a repeat of violence that marred the 2008 presidential poll. Mugabe (88) has led the country since independence from Britain in 1980 and is blamed for running the economy into the ground and for massive human rights abuses.
The West has imposed sanctions on Mugabe and his allies, accusing them of election violence and using state security agents to beat up and detain opponents.
Mugabe and Prime Minister Morgan Tsvangirai, who is also the opposition leader, share power in a unity government.
Mugabe's Zanu-PF party is pushing for elections this year, ahead of schedule, while Tsvangirai's Movement for Democratic Change wants new elections only after the adoption of a new constitution and electoral, security and media reforms.
Under the terms of the power-sharing deal new elections must be held by next year.
The government has turned to South Africa and Angola to help plug a $400-million hole in Zimbabwe's budget.
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