Maravi

(NEWZIMBABWE) IMF predicts zero growth for Zim in 2011

COMMENT - 'Lack of foreign capital' = financial sanctions like ZDERA.

IMF predicts zero growth for Zim in 2011
by PANA
27/04/2010 00:00:00

THE International Monetary Fund (IMF) has sharply down-graded economic growth projections for Zimbabwe this year, saying a variety of factors will limit this to just 2.2 per cent, down from the six percent earlier forecast.

In a report, the Fund also predicted zero growth next year, and largely blamed lack of foreign capital, and the government's controversial economic empowerment policies for the slump in economic growth.

The southern African country has failed to mobilise US$10 billion in donor support to revive the economy, which is starting to take up shape agian after 10 years of contraction.

Donors are insisting on further reforms, including clarity on the government's new empowerment drive under which the authorities want to seize majority shareholding in all foreign-owned businesses operating in the country.

The IMF predictions are worse than what the government itself has forecast. Last week, Finance Minister Tendai Biti revised growth downwards to 4.8 percent this year from 7.7 percent, citing lack of foreign capi tal and surging inflation.

Most industries badly require loans to re-build, but all foreign lines of credit remain closed. As a result, economic activity remains stifled.

In addition to the credit drought, foreign investors have also been rattled by the country's empowerment drive, and largely chosen to sit on the fence for now.

After a coalition government came into power last year, economic recovery was heavily premised on strong foreign investment, particularly in the mining sector.

But this has since evaporated after the authorities announced plans to seize 51 percent shareholding in all foreign-owned businesses, particularly mining companies. - PANA

Labels: GREAT DEPRESSION II, IMF

posted by MrK @ 3:32 PM