'Political stability key for Zim's growth'

HARARE - The success of Zimbabwe’s re-engagement efforts with the international community and multilateral lenders is largely dependent on political stability as infighting worsens in the ruling Zanu PF, an international think tank has said.

A Fitch Group Company unit, BMI Research (BMI) — in its summary report on Zimbabwe Country Risk released on Monday — said work to mend the rift between Zimbabwe and Bretton Woods institutions was largely depended on the events in Zanu PF’S factional fights.

“Further progress in Zimbabwe’s efforts to re-establish itself with international lenders will be largely dependent on political considerations, as the expected increase in political instability associated with President Robert Mugabe’s succession will encourage populist measures,” BMI said.

Top members in the party have been on a warpath to discredit each other and secure a candidate who can succeed 92-year-old Mugabe who has been on the reigns since 1980.

Finance minister Patrick Chinamasa last week announced that government was working on “necessary documentation” for the country to implement its $1,8 billion arrears clearance strategy with multilateral institutions expected to meet in the second half to approve the strategy.

However, the ruling party has seen its factional fighting intensify over the last few months; a situation that analysts believe has also impacted the Zimbabwe Stock Exchange.

In wake of the infighting the local bourse’s market capitalisation contracted by 14 percent to $2,6 billion in the three months to March 2016 from $3,1 billion in December last year, as the country’s economy hurtles towards recession.

BMI said government had to carefully watch its policies in the coming months as they had a direct effect on the country’s future financial support prospects.

“Between now and when the country disburses funds in its debt strategy, the government needs to ensure that political stability is maintained,” BMI said.

The think tank also noted that the task was going to be difficult as unrest has been prevailing in the poverty-ravaged country following a recent announcement by the central bank that government was to print bond notes to incentivise exporters.

However, BMI said the bond notes were going to lead to an increase in broad money supply anticipated to see a return in inflationary pressures before the year ends.

Last year, at the annual International Monetary Fund-World Bank meetings in Lima, Zimbabwe and its preferred creditors came to a consensus that the country had to clear its $1,8 billion arrears for re-engagement and financial support talks to begin.

Presently, multilateral financial institutions are barred by law from extending loans to Zimbabwe because of its outstanding debts.

According to Chinamasa, the agreement between Zimbabwe and multilateral institutions on the repayment of the arrears is going to pave way for long-term financing from the creditors.

Comments (2)

where is the $15billion chinamasa?

safa ngendlala - 20 May 2016

The statement of political risk as the stumbling block to Zimbabwe growth is over generalizing the problem. We all have an idea of the political players, on the wide spectrum we have every Zimbabwean and the entire world, but on the narrowest extend we have the ones that call the shoots in Zimbabwe politics, Mugabe, Grace , Chiwenga, Chihuri, Bonyongwe and the top JOC as before the GNU days. Political parties in Zimbabwe, are just dogs, bucking at the elephant which is Mugabe and his calves. Mugabe frail as he looks, behind him are well polished knives, guns and alert CIOs, military intelligence and etc. These are the once that are offering the greatest risk to Zimbabwe growth. Any change in the political risk profile of Zimbabwe, like the GNU, did nothing to touch these mention, and as such the little raft changes which saw a massive relief on the population and the country at large is the tip of how sensitive the economy is to this risk. As such, the economics on Zimbabwe should go an extra mile and put weight on these individuals and let the people know so that in the next election they may be able to vote wisely. To just mention Political risk, people would be tempted to thing like of Biti, Tsvangirai, Madhuku, and Dabengwa as part of the risk. Mugabe and these mentioned are not only risk to Zimbawe but to the entire SADC region and the world. Their citizen have threatened stability in may countries more liek they Syrian wars have on Europe. Differences is that Africans do not cry much of the catastrophy of these movements because its un African not to take care of extend families. South Africa is home to more than 3 million Zimbabweans so is Botswana, Mozambique, Angola, Tanzania, Namibia Uganda etc.

amina - 30 May 2016

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