ZIMBABWE’S economy is projected to rebound from the sluggish 1,2 percent growth expected this year to a steely 4,8 percent driven by a cocktail of reforms and positive external factors.The 2016 economic growth rate was revised to 1,2 percent during the mid-term fiscal policy review from the 2,7 percent forecast earlier this year on account of poor agricultural performance due to drought and subdued global commodity prices. Current deflationary trends are expected to continue until year end, but inflation is seen higher at 1,1 percent in 2017 due to projected higher fuel prices and stronger aggregate demand.
According to the 2017 National Budget Strategy Paper developed by the Ministry of Finance and Economic Development, projected growth is anchored in fundamental economic assumptions that include improved performance of agriculture.
Meteorological and climate change experts for SADC have forecast normal to above normal rainfall in the next rainy season, a positive phenomenon for Zimbabwe’s agriculture driven economy. Projections say growth will also depend on increased financing for agriculture, incentives for exporters, better mineral prices, improved investment climate, re-engagement with International Monetary fund and other global funders and positive gains from measures taken to cushion local industry.
Exports are projected at $3,8 billion, against imports of$5,4 billion, resulting in a high unsustainable trade gap of over $1,5 billion.
Government says in line with the value addition and beneficiation thrust, import restrictions will remain necessary, while instituting appropriate measures that promote production for both the domestic and export markets will be critical. The budget strategy paper says that a number of measures will be required in 2017 to stimulate growth in productive sectors.
This will entail further support measures to mining through review of the fiscal taxation regime, capacitating Fidelity Printers and Refineries to buy more gold, equipping small scale miners, value addition of minerals, concluding consolidation of the diamond mining sector, recapitalisation and restructuring of Hwange to focus on coal mining and reallocation of chrome claims under ZIMASCO to enhance production.
National budgeted revenues, which were revised to $3,8 billion in the midterm fiscal policy review due to weak performance of most revenue heads, are projected at $4 billion in 2017. The strategy paper says public employment costs will continue to be disproportionately high in relation to budget revenue.
“Clearly, fiscal space remains constrained, highlighting the urgency for implementation of the Cabinet thrust to contain and rationalize recurrent expenditures, predominantly reduction of employment costs. This allows for scope increases towards increased priority development public expenditures.”
Against this background, the Ministry of Finance says Government ministries should make submissions for budget allocations focusing on programmes that maintain coverage and quality of public services and ongoing Zim-Asset projects.