ZIMBABWE’s economy will grow by less than 1% this year, contrary to the 1,4% projected growth by Treasury, a local economist has said.
BY VICTORIA MTOMBA
In an interview, economist Prosper Chitambara said since the country had failed to meet its first quarter revenue targets and expenditure pressures were high, making it difficult for the economy to meet its growth projections.
He said the civil servants bonus payments increased pressure on government expenditure and borrowings were likely to increase, saying that was unsustainable.
“The outlook is not positive, the budget deficit continues to widen and increase the country’s indebtedness and the risk profile as government borrowing crowds out the private sector. I don’t think this year the economy will grow above 1%. The agriculture sector has been affected by drought and the implications will be felt by the rest of the economy and I think the economy will be stagnant this year.”
Another local economic analyst said the economy would not grow by 1,4%, as the decline in agriculture has negative implications.
“Agriculture projections have dropped quite significantly and whatever the growth in mining will be, it will not compensate for the drop in agriculture. The growth will be below 1% or stagnant,” the analyst said.
Zimbabwe is facing a drought season and many people are in need of food handouts.
The analyst disagreed that government borrowings would result in the crowding out of the private sector because financial institutions were no longer lending due to the absence of quality borrowers.
In a first quarter bulletin, Treasury said despite the headwinds facing the economy, growth in 2016 was projected to remain positive at 1,4%.
Treasury said the growth was anchored on strong performance in mining and services sectors.
The African Development Bank projects Zimbabwe’s economy to grow by 1,6% on the back of anticipated growth from tourism and construction sectors.
The bulletin came when projections in the 2016 National Budget are unlikely to be met as revenues on most tax heads decline as well as expenditure pressures emanating from payments of the outstanding 2015 salaries and wages, as well as the associated bonuses.
Treasury said $808,4 million was collected during the first quarter in revenues and expenditures stood at $968,2 million.
The report shows that $245 million Treasury Bills were issued for budgetary support and debt repayment purposes.