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Govt dismisses IMF forecasts
By Golden Sibanda
GOVERNMENT has dismissed the significantly lower revised economic growth forecasts by the International Monetary Fund, which predicted the economy would expand by not more than 2,2 percent this year.
The IMF had earlier predicted that the improving macro-economic conditions in the country and a stable political climate would combine to enable a 6 percent economic growth this year.
However, in the recent World Economic Outlook Report, the IMF said the economy would expand by 2,2 percent, but register no growth next year.
Cognisant of the investment and many other challenges facing the economy, Finance Minister Tendai Biti also reviewed downwards his initial 7 percent economic growth forecast for this year to 4,8 percent.
However, Secretary for Economic Planning and Investment Promotion Dr Desire Sibanda dismissed the IMF forecast, saying the economy was still well placed for higher growth rates.
He said the Government would adopt country-specific economic growth strategies targeting the most critical growth enablers that include key infrastructure, manufacturing, agriculture and mining.
Dr Sibanda argued that while the economy faced a number of challenges, Government remained confident that the economy would still register a significantly higher percentage growth rate this year.
He also said that while the rate of economic growth was debatable, the fact that the economy would expand by more than 2,2 percent was certain.
“The economy is coming from a downturn and economies coming from such a scenario always register significantly high growth rates. This economy would grow by a significantly higher rate riding on the macro-economic policies adopted by Government last year and the prevailing political environment,” said Dr Sibanda.
He said the Government was convinced that the economy would expand faster than predicted by the IMF considering that focus was now on growth after the economy stabilised last year.
Government’s adoption of the multi-currency system last year resulted in overnight disappearance of an unprecedented hyperinflation rate, price stability and improved product availability.
Further economic stabilisation measures were also rolled out through the Short-Term Emergency Recovery Programme, which has been replaced by a growth-oriented 2010-2012 three-year macro-economic and budgetary framework, also known as STERP II.
These measures, soon to be complemented by the Medium-Term Plan, are expected to collectively enable much higher economic growth rates even in the face of a myriad of challenges the country is facing.
Zimbabwe was expected to receive massive inflows of foreign direct investment after the formation of the inclusive Government and adoption of improved macro-economic policies.
This has, however, not happened, as investors remained sceptical of the country’s future political environment as well as the ongoing indigenisation and economic empowerment programme.
This was graphically demonstrated when Zimbabwe failed to attract external financial aid to fund the US$810 million deficit in the 2010 National Budget, which Minister Biti hoped to fund from a Vote of Credit.
This development resulted in a tight liquidity environment, which saw total bank deposits amounting to only US$1,4 billion by March.
However, Dr Sibanda said in spite of these challenges, the economy was well on course to register higher growth rates as happened in Angola in 2008 after it emerged from its civil war.
In 2008, the Angolan economy grew by an average of 21 percent while southern African economies have been growing at 6 percent per annum on average, the same growth forecast that Zambia has predicted for its economy this year.
Dr Sibanda said the Mid-Term Plan would support more investment through emphasis on Public-Private Partnerships projects in infrastructure, agriculture, manufacturing and mining.
Deliberate country-specific economic growth measures, said Dr Sibanda, would see the Gross Domestic Product expanding to US$9 billion in five years.
Minister Biti had predicted a higher GDP growth rate banking on a 40 percent growth forecast for the mining sector.
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