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(NEWZIMBABWE) Biti growth forecast imaginary: analysts

Biti growth forecast imaginary: analysts
16/10/2012 00:00:00
by Brian Paradza

ECONOMIC commentators have dismissed as imaginary Treasury projections that GDP growth would reach 9 percent in 2013, saying the forest discounted the potential adverse impact of political uncertainty and increased spending pressures.

In a statement that marked the start of consultations for the 2013 national budget last week, the Ministry of Finance said the economy would grow 8.9 percent which contracted sharply with a more conservative IMF projection of about 6 percent.

But economic commentators said the treasury projection was not achievable considering the uncertainty arising from fresh elections expected in March next year as well as increased pressure on the budget.

Said Harare-based economist Christopher Mugaga: “I tend to go along with the IMF projection. We have elections next year and that in itself dampens any economic prospects for the country.

“So to think of an economic growth of above 5% for Zimbabwe is an exaggeration, we can’t experience such a growth in 2013.”

Another economic commentator, Brains Muchemwa added: “The growth forecasts are too bullish considering that private sector fixed capital formation is likely to remain subdued due to the liquidity challenges that definitely won't go away next year.

“Equally, the misaligned government expenditure in the face of policy makers that do not want to make drastic decisions on civil service reforms means that government expenditure will remain consumptive and therefore will not stimulate the economy that much.”

In July, Finance Minister Biti slashed his 2012 growth forecast to 5.6 percent from 9.4 percent due to a poor harvest and a lack of donor funding and investment.

Other productive sectors also continue to operate below capacity with the mining and the manufacturing sector constrained by the lack of capital as well as power supply problems.

Biti is due to present the budget to parliament on November 15 and treasury officials said there were positive signs, particularly regarding inflation and government revenues.

Consumer inflation slowed to 3.63 percent in August from 3.94 percent previously. The government also projects that revenues should grow to $3.8 billion next year from an expected $3.4 billion in 2012 as authorities crack down on corporate tax defaulters.

Still, the country remains hamstrung by a huge debt burden that is preventing it from securing new aid. Its total external debt was estimated at $10.7 billion, or 113.5 percent of GDP, at the end of 2011. Of this, more than half is in arrears.

Labels: 2013 BUDGET (ZW), IMF, TENDAI BITI

posted by MrK @ 8:20 PM