'MTP fails to stimulate growth'

VICTORIA FALLS - Economic Planning minister Tapiwa Mashakada says the Medium Term Plan (MTP) has failed to stimulate economic growth and meet set targets due to absence of donor funding and liquidity constraints obtaining in the country.

Launched in July 2010, the economic blueprint’s main objectives are to transform the economy, reduce poverty, create jobs, maintain macro-economic stability and restore the economy’s capacity to produce goods and services competitively.

Appraising members of parliament on the progress and evaluation of the implementation of the MTP (2011-2015), Mashakada said although there is some progress made in some of the blueprint’s objectives, only inflation target has been met successfully.

“Our inflation target in the MTP is between four and six percent and I am happy to say that in 2011 we achieved 3,5 percent inflation rate and for 2012 we are still within range,” he said.

“For the first two years of the MTP we have manage to keep inflation levels down mainly due to the dollarisation of the economy. However, there are still inflationary pressures from utilities such as electricity and water bills.

“There are also threats of imported inflation as we are fast becoming a net importing nation.”

Market watchers have however, warned that the success of economic policies such as the MTP, which requires about $9,3 billion for the set targets to be met, hinges on the availability of funding.

Mashakada said the MTP has also failed to reach its targets of an average annual economic growth rate of 7,1 percent during the five-year period and an average annual employment creation of six percent.

“In 2011 we achieved 9,3 percent economic growth but in 2012 the economy contracted to 5,6 percent mainly as  a result of poor performances in agriculture and mining sectors. When agriculture sneezes the whole economy catches the flue,” he said.

Also at the heart of the policy are investment regulations, co-ordination and promotion, natural resource utilisation, poverty reduction and gender mainstreaming, energy infrastructure and rural development.

“The MTP, which envisages a current account deficit of five percent of Gross Domestic Product by 2015, foreign exchange reserves of at least three months import cover and double-digit savings and investment ratios of 20 percent of GDP, is facing serious funding challenges as we are relying only on the budget for funding.

“To date we have only two weeks of import cover and this puts us in a very dangerous position should there be war,” he said.

Mashakada said some of the priorities that the blueprint has failed to successfully meet include macro-economic stability, infrastructure and human-centred development, employment creation, development of SMEs, information communication technology, science and technology and good governance, removal of sanctions and combating corruption. - John Kachembere

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