Finance Minister Patrick Chinamasa today said Zimbabwe’s economy will grow by 0.6 percent in 2016, half of his previous projection, but is seen rising to 1.7 percent in 2017 backed by better performances in agriculture and mining sectors.
It represents a climb down from 1.2 percent projected in the mid-term budget statement but is more optimistic than the projection of -0.3 percent by the International Monetary Fund.
The IMF also projected a -2.5 percent growth for next year if the government fails to implement drastic reforms to cut expenditure.
Presenting a budget with a total envelope of $4.1 billion, Chinamasa said government expects to collect revenue of $3.7 billion. The wage bill will gobble $3 billion of the budget, down from $3.14 billion for this year while capital expenditure takes up $520 million.
Chinamasa said government would next year run a deficit of $400 million compared to $1.1 billion this year after government paid last year’s bonuses and December 2015 salaries this year.
Like President Robert Mugabe in his State of the Nation address on Tuesday, Chinamasa skirted the contentious issue of bonuses for government workers this year.
But he said a deal for stands for civil servants would be partly paid for “through the 13th cheque whose modalities of implementation are to be negotiated, discussed and agreed”.
In his mid-term statement, Chinamasa proposed to freeze bonuses for two years to save government $180 million only for the proposal to be publicly shot down a couple of days later.
Diaspora remittances, now second main source of foreign currency after exports, stood at $649 million in the 10 months to October compared to $770.6 million over the same period in 2015.
The agriculture sector is seen recovering from the El Nino induced drought decline of -3.7 percent to a 12 percent growth driven by higher maize and tobacco output.
A modest growth of 0.9 percent in 2017 is expected in the mining sector with firmer international prices and increased output anticipated.
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