THE growth projection for 2014 of 6,1% may be too high considering the volatility of commodity prices on the international markets, an economist has said.
Report by Victoria Mtomba Business Reporter
Presenting the budget analysis at the Confederation of Zimbabwe Industries (CZI) breakfast meeting last week economic and banking committee member James Wadi said: “The economic growth of 6,1% may be very aggressive due to the depressed commodity prices. There won’t be much in terms of the firming of commodities as is happening on the global stage.”
In his budget presentation, Finance minister Patrick Chinamasa said global average prices are expected to decline by 4,2%. He said in 2014 all mineral prices are expected to decline except nickel.
“The projected decline in minerals will have adverse implications on the recovery efforts in the mining sector as well as the economy in general,” said Chinamasa.
Chinamasa said oil prices are expected to decline, but what will be favourable to Zimbabwe is that the oil import bill will be reduced.
The economy growth rates were revised downwards this year by treasury to 3,4% from 5% due to low economic activity.
“Revenue targets against the background of depressed economic activity may be missed unless there is meaningful diamond contribution,” he said.
- Chamisa under fire over US$120K donation
- Mavhunga puts DeMbare into Chibuku quarterfinals
- Pension funds bet on Cabora Bassa oilfields
- Councils defy govt fire tender directive
Keep Reading
Wadi said the financial sector will not be able to buy the treasury bills that were proposed by the Finance minister as banks’ liquidity is tied up in loans.
He said the financial sector might need some time to absorb treasury bills as it has limited capacity.
He applauded the measures to capacitate the central bank, but said the move might affect CBZ Bank which was helping government with its financial needs.
Wadi said CBZ Bank’s 25% market share will be affected to a large extent as some deposits will be shifted.
“There is need to ensure that government deposits are not quarantined at RBZ,” he said.
CZI past president Kumbirayi Katsande said the country needs to adjust to its means and there is a lot of pain as people are failing to purchase goods due to liquidity problems.
“The economy is at the edge the supermarkets are full and we do not have the money to buy the goods. We have a high-cost economy, we need a meeting of the minds. What is the depth of the crisis? We need an eye of a storm but we have this quietness that something is going to happen,” he said.
Bankers’ Association of Zimbabwe President George Guvamatanga said the level of doing business is too high there is need to adjust the prices in the economy.
