Economy can turn around if there is national passion and pride to succeed

Zimbabwe will return to a growth path if it adopts right economic policies and a national passion and pride to succeed, one of the country's financial institutions, NMBZ Holdings says in its report for the year ended December.

The institution, whose four key executive directors fled the country for allegedly externalising funds says to return to a growth and recovery path, the government should contain money supply growth and runaway inflation. It should also restore relations with the international financial community.

Central bank governor Gideon Gono has already stated that he intends to see inflation reduced to around 200 percent by year end and is holding discussions with the International Monetary Fund.

NMBZ says the economy recorded its fifth successive year of economic decline last year. The country's gross domestic product declined by 3.7 percent in 1999, by 5 percent the following year, 7.5 percent in 2001, then by a staggering 14.5 percent in 2002. It is estimated to have declined by 13.2 percent last year.

Major reductions in GDP were expected in transport and communication which was expected to fall by 13.5 percent. Distribution was expected to decline by 12.5 percent, manufacturing by 12.5 percent and construction by 9.5 percent.

Inflation, which averaged 198.9 percent in 2002, ended 2003 at 598.7 percent. It was down to 505 percent by April. The central bank is targeting a rate of 175-200 percent by the end of the year.

Money supply closed the year 2002 at 164.8 percent and was expected to end 2003 at 500 percent. It stood at 303.4 percent in July.

Domestic debt, which stood at $346 billion at the end of 2002, ended last year at $600 billion. It is expected to shoot up to $2.4 trillion at the end of this year.

The country was also in a precarious balance of payments position with a deficit of US$1 439 million.

Official foreign currency reserves were estimated at US$175 million which represented one month of imports. Usable reserves were estimated at only US$40 million.

NMBZ, which was one of the best performers in terms of profitability did not fare too well either. Net interest income improved from $18.5 billion to $43.9 billion while net operating income stood at $52.8 billion, up from $20.9 billion.

Net profit was, however, less than double at $16.1 billion, up from $9.6 billion.

© Insider Publications 2004. This story is available for syndication. Contact the publisher at insider@ecoweb.co.zw or charlesrukuni@yahoo.com