Economy in precarious state: Biti

HARARE - Finance minister Tendai Biti says Zimbabwe could miss its five percent 2013 projected economic growth target due to fundamental weaknesses that continue to depress the economy.

“These weaknesses are reflected through liquidity and financing challenges, limited revenue growth, as well as a widening trade and current account gap, emanating from depressed exports and over-dependence on imports,” he said.

Zimbabwe’s economy is picking up after a decade of contraction, with average industrial capacity utilisation at around 40 percent.

However, economic experts warn that unless property rights are restored and government guarantees political and economic stability, the country will remain trapped in a financial slump.

In his March state of the Economy Report, Biti said capacity utilisation of most productive sectors remained well below potential, dampening prospects of fast economic recovery.

The continued liquidity crisis in the country saw Zimbabwe’s trade deficit widening to over $1 billion, while government only collected a total of $765 million in tax revenue in the first quarter against a target of $825,3 million.

“What this means is that the economy is not producing and this is not sustainable,” said Biti adding that industry must be revived soon if Zimbabwe is to move forward.

As a result, the economy has relied heavily on imports, particularly of basic goods, to bridge the shortfall in local production.

“As at March 15, 2013, monthly exports stood at $196 million, while cumulative exports amounted to $689 million compared to $768,2 million declared in the same period in 2012.

“This represents a decrease of 10,3 percent in 2013,” said Biti.

According to Treasury monthly imports amounted to $294 million, while cumulative imports stood at $1,739 million representing a 14 percent increase from $1,525 million recorded in the prior period.

Biti said the burgeoning trade gap — reflective of the continued absorption of imports by the country — has the potential to reverse economic gains of the past few years.

“Unless we change our economic pattern from an extractive accumulation model to a value addition one this economy cannot move forward,” he said.

As at March 22, government’s total expenditure amounted to $221,9 million against the monthly target of $252,1 million.

Of this amount, recurrent expenditure was at $206 million while capital expenditure accounted for $6,3 million.

“Employment costs, at $155,3 million, accounted for 75,4 percent of total recurrent expenditures as at March 22.

“Disbursements for capital developments were $8,1 million, while actual expenditures stood at $6,3 million for the month of March,” said Biti.

On the prices side, inflation remained contained below three percent during the first quarter with January, February and march recording, 2,5 percent, 2,98 percent and 2,76 percent respectively.

“This largely reflected depressed demand due to liquidity challenges, as well as a depreciated South African rand, which gave relief to importers,” said Biti. - John Kachembere

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