Accessibility links

Breaking News

IMF Sees 2.2 Percent Growth for Zimbabwe in 2010 - FM Biti Projects 7 Percent

The International Monetary Fund is projecting growth of just 2.2 percent this year but Finance Minister Tendai Biti looks for an expansion of 7 percent predicated on inflows of US$1 billion in foreign investment and donor contributions

The International Monetary Fund says the economic outlook for Zimbabwe in 2010 is “highly uncertain," noting that public wage costs are crowding out government expenditures which might stimulate growth, while inflows of foreign capital have slowed down because of the uncertainty created by indigenization plans.

The IMF said growth could slow “significantly” to 2.2% this year compared with a 4% output expansion in 2009.

But Finance Minister Tendai Biti told Reuters in an interview at the African Development Bank annual assembly in Abidjan, Ivory Coast, that he expects the Zimbabwean economy to grow by about 7% this year on what he forecasts will turn out to be some US$1 billion in foreign investment and donor contributions.

Biti earlier had called for 2010 growth of 4.8 percent - still more upbeat than the IMF forecast.

Though downbeat on growth, the IMF noted that economic and humanitarian conditions were much better after a decade of contracting growth and hyperinflation in the past few years. The IMF directors said Zimbabwe should stick with its multiple hard currency regime for now rather than trying to reintroduce the Zimbabwean dollar.

Economic Planning Minister Elton Mangoma admitted the economy faces challenges but told VOA Studio 7 reporter Blessing Zulu that Harare still hopes to see a sustained expansion this year.

Economist David Mpamhadze says recent economic growth might have seemed strong simply because the country was bouncing off the bottom that it hit in early 2009, when a unity government was put in place.

Signaling the risk of an economic stall, Zimbabwean companies have been closing their doors and others scaling back operations due to liquidity problems, industry sources said. Zimbabwe National Chamber of Commerce Chairman Jabulani Nkomo said firms urgently need investment as they cannot afford bank loans at high interest rates.

Nkomo told VOA Studio 7 reporter Gibbs Dube that more companies will collapse if foreign direct investment fails to pick up. He said thousands of workers have been laid off and others have not been paid for six months

Companies that have closed or downsized, particularly in Midlands province and the Matabeleland region, include Kariba Batteries, Caridon Abrasives, Cargill Cotton Company, Hunyani Paper Mills, Archer Clothing, Textile Mills, Security Mills, Radiator and Tinning and Ingwebu Breweries, sources said.

Elsewhere, a team of ministers from President Robert Mugabe's ZANU-PF party is urging civil servants to form co-operatives and consortiums in order to participate in the corporate indigenization process.

But Matabeleland Chamber of Industries Chairwoman Ruth Labode said civil servants are unlikely to be able to raise capital to acquire significant shareholdings under indigenization as their current salaries are too low.