African Economy: Zimbabwe works hard to restore confidence in economy: official

The Zimbabwe government is working hard to restore confidence in the economy and is putting in place a sound policy framework to steer economic growth, Finance Minister Patrick Chinamasa said Wednesday.

Speaking a day before he presents the 2015 mid-term fiscal policy review statement, Chinamasa said Zimbabwe's economic prospects were bright.

"I am very satisfied with the progress that we have made to restore our economy back on track," Chinamasa told journalists.

"Where I sit now, I am a happier person than I was last year because we are laying in place a sound policy framework on the basis of which we should see economic recovery for our country," he added.

Zimbabwe's economy is trying to recover from a decade of decline which ended in 2009 when the country adopted the multiple currency regime which not only tamed hyperinflation but helped the economy to rebound and post double digit growth rate of 10 percent in 2012.

However, the economy has been on a slow down since then, with government projecting it to grow by 3.1 percent in 2015, marginally down from 3.2 percent in 2014.

The International Monetary Fund (IMF) and the World Bank, however, have projected lower growth for Zimbabwe citing low foreign direct investment, unsustainable debt and depressed commodity prices on the global market.

In its Global Economic Prospects report released last month, the World Bank forecast Zimbabwe's economy to grow by 1.0 percent in 2015 while the IMF in April downgraded the country's growth forecast to 2.8 percent from an initial 3.2 percent.

The IMF said the downward revision was largely due to the poor agricultural season and depressed international commodity prices.

"Key risks to the outlook stem from a further decline in global commodity prices, fiscal challenges and possible difficulties in policy implementation," said the IMF.

On its part, the Zimbabwe government has adopted a raft of measures aimed at stabilizing and rejuvenating the economy.

These include the introduction of the multiple currency regime in 2009 and bond coins last year to ease change shortages and ultimately lower prices in the economy.

Government is also undertaking a two-year Staff Monitored Program (SMP) with the IMF due to end in December this year under which the country has committed to implement a raft of economic reforms to put the economy on a sustainable growth path.

Under the SMP first signed in June 2013, the Zimbabwe government has committed itself to undertaking fiscal policy reforms by eliminating primary fiscal deficits, reduce government's wage bill that consumes 80 percent of state revenue and restore confidence in the financial sector by clearing bad loans.

Other targets include improving the investment climate by clarifying the indigenization law which requires foreign investors to sell majority shareholding to locals and developing a strategy to clear the country's external debt which stands at around 9 billion U.S. dollars. Endit