Zimbabwe’s inflation rate will fall below 4 percent by the end of 2011 and the country will launch a sovereign wealth fund next year to conserve mineral wealth for future generations, Zimbabwe’s finance minister said on Wednesday.
“At the end of 2011, inflation will be clearly under 4 percent,” Tendai Biti told Reuters in an interview on the sidelines of a conference.
“The cost of oil has been a major inflation driver.”
Zimbabwe’s headline consumer inflation quickened to 4.3 percent year-on-year in September from 3.5 percent in August, data last week showed.
Biti said fuel prices had contributed to rising inflation, and oil has eased in recent weeks.
The southern African country has recovered from hyper-inflation which hit 500 billion percent in 2008 but fell back into single figures thanks to the adoption of multi-currencies in 2009.
Keep Reading
- 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
Zimbabwe’s economy is likely to grow 7.8 to 9 pct in 2012 compared with 9.3 pct in 2011, Biti said in a pre-budget statement earlier this month, adding that Zimbabwe’s growth next year was vulnerable to “corrosive politics” and to a dip in commodity prices.
The government’s projections are for an inflation rate averaging between 3.7 and 5 percent up to the end of 2012.
The power-sharing government between President Robert Mugabe’s ZANU-PF party and Prime Minister Morgan Tsvangirai’s Movement for Democratic Change, of which Biti is a member, has been in power since disputed elections in 2008.
It has brought a measure of economic stability to the country, which holds the world’s second-largest platinum reserves and vast diamond reserves.
Biti said Zimbabwe planned to launch a sovereign wealth fund next year to conserve some of that mineral wealth, working with organisations such as the African Development Bank.
“We will definitely set up a sovereign wealth fund in 2012,” he said.
“We can put $200 million aside for this fund every year, the money will be carefully invested.”
The AfDB and other multilateral organisations have recommended mineral-rich countries set up such rainy-day funds, but previous attempts by African governments have not always been successful.
Nigeria laid out the timeframe for the launch of a sovereign wealth fund on Tuesday, its second attempt at ringfencing a fund to conserve oil wealth.
Zimbabwe plans to launch a $100 million development bond next year, Biti said, following a $50 million diaspora bond issued last year.
Countries such as Kenya have been launching infrastructure bonds aimed at investors in the country’s diaspora, again with the approval of the AfDB.
Zimbabwe’s diaspora bond found interest particularly in South Africa and Britain, Biti said.
“It was oversubscribed,” he said.