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Zimbabwe Finance Minister Sees 2007 Growth Upturn, Inflation Drop

Zimbabwe Finance Minister Herbert Murerwa on Thursday presented a 2007 budget that calls for government spending of Z$4.6 trillion (US$18.4 billion), predicting real economic growth of 0.5% to 1% next year with inflation falling substantially.

Economists said his growth and inflation assumptions were unrealistic.

Murerwa said 12-month inflation, measured at 1,070% in October, would come under 400% in the course of 2007. The IMF has warned inflation could average 4,000% next year if the Harare government does not urgently pursue drastic reforms.

Echoing IMF criticisms, Murerwa took a swipe at the Reserve Bank of Zimbabwe for funding government operations, saying “such quasi-fiscal expenditures have risen to levels that are now undermining our turnaround efforts by systematically increasing the growth of money supply and therefore fuelling inflation."

Present for his budget address were President Robert Mugabe, vice presidents Joyce Mujuru and Joseph Msika, and Reserve Bank Governor Gideon Gono.

Murerwa called on banks to support land reform by making loans, projecting growth of 6.4% in the troubled agricultural sector. He acknowledged that the government “has no capacity to meet the total financing requirements of the agricultural sector.”

Chief economist Prosper Chitambara of the Labor and Economic Development Research Institute in Harare told reporter Blessing Zulu of VOA’s Studio 7 for Zimbabwe that Murerwa’s budget does not look credible.

More reports from VOA's Studio 7 for Zimbabwe...