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Zimbabwe economy to grow by modest 0.6 percent in 2016

Xinhua, December 9, 2016 Adjust font size:

Zimbabwe's economy is projected to grow by a modest 0.6 percent in 2016, down from 1.1 percent in 2015 due to an El-Nino induced drought and weak commodity prices on the international market, Finance Minister Patrick Chinamasa said on Thursday.

The minister had initially projected the economy to grow by 2.7 percent in 2016 but revised downwards the growth forecast to 1.2 percent in September.

He said the economy was expected to slightly recover and post 1.7 percent growth in 2017 due to anticipated better rains, recovery of some commodity prices on the international market and implementation of reforms to ease doing business.

The minister was presenting in parliament the 2017 national budget under which the government expects 3.7 billion U.S. Dollars in revenue and plans to spend 4.1 billion.

"The economy is still confronted with a number of headwinds, which continue to restrain sustainable and equitable economic growth," the minister said.

He said the 2017 budget was intended to increase domestic production backed by critical reforms to re-orient fiscal resources towards development projects, improve investment environment and finalize re-engagement with international financial institutions.

Chinamasa also hailed the introduction of bond notes, saying the notes should spur private spending.

To boost platinum production, the minister extended a 15 percent tax on raw platinum exports with another year to December 2017.

He said the reprieve was aimed at giving the three platinum producers enough time to complete setting up base metal refineries.

Amid a shrinking tax base, the minister also proposed a number of measures to boost revenue, including proposing a 5 percent levy on all mobile phone airtime and mobile broadband to go towards a health fund.

He also announced incentives for companies in Special Economic Zones, including exemption from paying corporate tax for the first 5 years.

The minister said robust fiscal adjustment and structural reforms, as well as arrears clearance were crucial to the promotion of a business environment conducive for economic growth.

After clearing its 15-year debt with the International Monetary Fund of 108 million dollars last month, the minister said the next step was to clear debt arrears to other multilateral creditors - the African Development Bank (610 million dollars), World Bank (1.16 billion dollars) and the European Investment Bank (212 million dollars) - early next year. Endit