Zim economic revival reliant on policy implementation, re-engagement

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African Development Bank -pic from The Government and Business Journal

HARARE – The African Development Bank (AfDB) said on Tuesday Zimbabwe could this year achieve higher than  projected growth on the back of positive sentiment following the  takeover of a new administration in the country, aided by support from  the country’s creditors.

The continental bank had earlier projected a growth rate of 1 percent  for the economy in 2018 and 1, 2 percent in 2019.

But the takeover of a new government which took over late last year,  positive sentiment coming with it and pronouncement of a reformist  budget and re-engagement with the international community could yet  boost the country’s growth prospects, the AfDB said in its Southern  Africa Economic Outlook for 2018.

“The budget presented to Parliament offered glimmers of hope to  investors on prospects of new reforms, especially on minimal investment  thresholds for external investors. But the economy is still experiencing  financial constraints, and debt remains high, with accumulated arrears,” it said.

“So, real GDP (Gross Domestic Product) growth is projected to remain  weak at one percent in 2018, with a marginal gain of 0, 2 percentage  points the following year. This projection could be reversed however,  depending on the outcome of the budget pronouncements and the country’s  re-engagement with the international community, especially its  creditors.”

The Zimbabwean government has forecast economic growth projection for 2018 at 4, 5 percent.

The southern Africa region is expected to grow by 2 percent this year,  up from 1, 6 percent in 2017 and by 2, 4 percent in 2019.

AfDB said high fiscal deficits in the region were impeding on growth.

“Governments should put in place measures to improve the mobilization  of domestic resources and funds from the private sector to ensure  adequate levels of development spending, stimulate growth and create  jobs, especially for young people,” said Stefan Muller, AfDB senior  economist for Southern Africa.

The region’s fiscal deficit is estimated to have widened to 5 percent  in 2017, with Mozambique, Zimbabwe, Zambia and Swaziland above 7 percent  of GDP, with the norm set at 3 percent.

Only Botswana and Lesotho returned to surplus, estimated at 0, 3 percent  and 0, 1 percent of GDP.

AfDB said Zimbabwe and other low income countries in the region such as  Malawi and Madagascar should take measures to improve their low tax to  GDP ratios through, among others, broadening the tax base through  formalizing informal businesses as well as reforming and strengthening  tax administrations and tax inspections to ensure tax compliance. – New Ziana

 

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