Zvamaida Murwira Senior Reporter
The African Development Bank Group (AfDB) has projected Zimbabwe’s economy to grow successively in the next two years underpinned by prudent fiscal measures being implemented by President Mnangagwa’s administration.
In its economic outlook report, AfDB said the economy will grow by 4,2 percent this year and by 4,4 percent in 2020, despite the challenges the country might be going through.
“The Government has adopted and is implementing prudent fiscal policy underpinned by adherence to fiscal rules, as enunciated in the Public Finance Management Act, together with financial rules.
“The reforms also re-prioritise capital expenditure through commitment to increase the budget on capital expenditures from 16 percent of total budget expenditures in 2018 to over 25 percent in 2019 and 2020,” said AfDB in a statement posted on its website.
Government has adopted a Transitional Stabilisation Programme (TSP) which is meant to stabilise the economy.
Last week, Zimbabwean monetary authorities liberalised foreign exchange as part of measures to contain the black market.
AfDB also noted that the economy performed beyond expectation last year underpinned by agriculture and peaceful elections in which President Mnangagwa romped to victory, beating his closest rival, Mr Nelson Chamisa of MDC-Alliance.
“The economy performed better than expected in 2018, expanding by an estimated 3.5 percent driven by agriculture, supported by relatively peaceful elections,” said the AfDB.
It said key drivers of economic recovery for Zimbabwe were agriculture and mining.
“The agricultural sector and mining are expected to be the main drivers of growth, backed by increased public and private investment,” said the AfDB.
The bank noted that Zimbabwe had opportunities requiring minimal additional investment to realise medium-term growth targets and stabilised its economy.
It hailed various economic policy measures Government was embarking saying these will go a long way in achieving economic turnaround for the country.
“Given the vast natural resources, relatively good stock of public infrastructure, and comparatively skilled labour force, Zimbabwe has an opportunity to join existing supply chains in Africa through the Continental Free Trade Area.
“To take advantage of such opportunities, the Government has adopted a three-pronged strategy based on agriculture, ecotourism as the green job generator, and special economic zones, growth pillars anchored on enhanced economic and political governance,” said AfDB.
The bank bemoaned cash shortages and the three-tier pricing system coupled with foreign exchange shortages that continued to constrain markets.
The Reserve Bank of Zimbabwe Governor Dr John Mangudya has since liberalised the foreign exchange market, a development that is expected to see hard currency flowing into the formal market.