Zimbabwe cuts 2013 growth forecast

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By Zimbabwe Investor on July 26, 2013. No Comments

Finance Minister Tendai Biti

Finance Minister Tendai Biti

HARARE — Zimbabwean Finance Minister Tendai Biti reduced his growth forecast for the year to 3.4% on Thursday and said disputes arising over the result of next week’s election would affect the chances of improvement in the economy.

The Southern African country stages a contentious election next week, which will pit entrenched President Robert Mugabe against Prime Minister Morgan Tsvangirai, his veteran political foe.

Mr Biti said the new government would need $1bn — nearly 10% of gross domestic product — immediately after the election to finance an expanded parliament and 10 new provincial councils laid down in a new constitution that was approved earlier this year.

Having previously said Harare could not afford to pay for the elections, Mr Biti admitted the government had somehow managed to raise the cash without borrowing or putting the economy at risk. He did not provide details, but said the finance ministry had received no revenue from $600m worth of official diamond sales this year.

Mr Biti, who is a senior member of Mr Tsvangirai’s Movement for Democratic Change (MDC-T) party, said pre-election jitters had hurt the economy, while output in mining and agriculture had plunged.

“The challenges facing the economy before and after the economy are huge. If we have a credible, free and fair and legitimate election, the chances of a quick rebound are there,” Mr Biti told a news conference on Thursday.

He had previously projected growth of 5% for this year compared with 4.6% in 2012.

There have been no reports of bloodshed in the build-up to voting — a source of anxiety for Zimbabweans and the international community after the bloodshed and violence that followed the 2008 vote. But the process has been dogged by a lack of funding, poor planning and allegations of irregularities, particularly in the voters’ roll.

About 600 foreign election observers, mainly from African bodies, had been accredited to observe the polls, while 6,000 local observers would also be watching the vote.

Mr Biti said inflation would now average 3.9% from an earlier forecast of 5% due to the economic slowdown and a depreciation of the rand in South Africa, from where Zimbabwe buys most of its imports.

The election will be the third attempt by Mr Tsvangirai to unseat 89-year-old Mugabe, who has ruled Zimbabwe since independence from Britain in 1980.

Africa’s oldest leader was forced into a power-sharing government with Mr Tsvangirai after the disputed 2008 polls. – BDLive