It is not in doubt that Zimbabweans, many of whom have taken to the streets in protest against President Robert Mugabe’s management of the economy, have no illusions about their predicament.
But nothing could have prepared them for the bleak set of numbers presented by Finance Minister Patrick Chinamasa as he tabled his mid-term fiscal policy review in Parliament today.
Chinamasa revealed government fears that the economy could contract this year, despite officials publicly sticking to a 2.7 percent growth target until a few months ago.
“When we started the 2015/16 agricultural season, the economic outlook was gloomy…at that stage, revisions of the economic growth rate for 2016 were pointing to the negative,” Chinamasa told Parliament.
A less-than-expected decline in agriculture and a rally in mining will, instead of negative growth, see the economy expand by 1.2 percent, Chinamasa said.
In May, Treasury had revised the 2016 GDP forecast to 1.4 percent. Analysts have charged that government forecasts of growth in an economy plagued by a bank note crisis, drought-induced food shortages and insignificant investment, are unrealistic.
However, what’s undeniable is that Zimbabwe’s economy is back in crisis after a brief respite that started in 2009 when the country dollarised and tamed hyperinflation as a power-sharing government that significantly eased political tensions.
Now, the benefits of dollarisation seem to have run out and political tensions are rising, triggering a series of street protests and strikes over the past few months.
Government revenues continue to fall; collections amounted to $1.692 billion in the first half of 2016, against the targeted $1.876 billion.
Chinamasa said he now expects full-year revenue to be $3.755 billion and not the initial target of $3.85 billion.
Expenditures, to June 30 2016,overshot the budget by $308 million, to reach $2.32 billion.
Of every dollar government collects as revenue, 97 cents goes to pay wages, Chinamasa said, while issuing a chilling warning. Government, which has over the past three months struggled to pay its workers on time, faces the prospect of a full-scale default.
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