Monday, October 5, 2009

Zimbabwe's economy to grow 6-7 pct in 2009-FinMin

Zimbabwe will grow by 6 to 7 percent this year and capacity utilisation, revenue collection and foreign investment will rise, but it still faces total debt of $5.7 billion (R44 billion), its finance minister said on Sunday.

The International Monetary Fund (IMF) this month forecast GDP growth for Zimbabwe of 3.7 percent for this year, in line with an earlier government forecast. The increase would be the first since 1997.

However, Finance Minister Tendai Biti said he was considerably more optimistic than the IMF, adding that growth could rise by as much as 15 percent in 2010 as the country aims to fully utilise its productive capacity and sell-off state assets.

He noted that the Zimbabwe stock exchange, which opened earlier this year, was one of the fastest growing in the world and said the withdrawal of the worthless Zimbabwean dollar from circulation early this year had breathed new life into the economy, which once battled world record-beating inflation.

Consumer prices were likely to decline an average of 7 percent this year, he said.

"It will be a long time before the Zimbabwean dollar will be reintroduced ... unless we could have exports of 30 percent of GDP, there is no way we can begin to think of reintroducing the Zimbabwean dollar," he said.

Biti added that he would like to see one regional currency in southern Africa.

Southern Africa's former breadbasket has seen its once-vibrant economy shattered by poor policy choices by President Robert Mugabe's government, particularly the seizure of white-owned farms for the resettlement of landless blacks.

But the formation of a unity government by Mugabe and his political rival Morgan Tsvangirai appears to have halted the economy's free-fall, although unemployment still hovers around 80 to 85 percent.

Zimbabwe was currently compiling a list of state companies for sale as it bids to raise funds, including communications companies and banks.

"In the last four months we have looked at every asset that we own," said Biti.

Earlier this month he said it was common knowledge the country was "broke." On Sunday, he repeated that total debts of $5.7 billion -- around 150 percent of GDP -- were unpayable, but the country was working on a debt strategy.

IMF Director for Africa Antoinette Sayeh said in an interview on Saturday there was talk in some quarters about clearing a portion of Zimbabwe's multilateral debt, but said that would not by itself help the country win financing from the IMF and the World Bank.

She said the IMF was encouraged by the significant rise in government revenues in Zimbabwe and a reduction in inflation, but that cutting spending on wages presented a challenge. Further political and economic reform efforts were needed before it won international support, she added.