Economy grows but not out of the woods yet

FINANCE Minister Tendai Biti is upbeat about the performance of the economy
but is at the same time concerned that without "fiscal marksmanship",
treasury would not be able to meet the nation's ever-growing needs.
Addressing a Government Work Programme (GWP) review and 2010 pre-budget
ministerial workshop on Thursday, Biti said the second half of the year has
performed well prompting the ministry to revise growth projections upwards.

"There has been a serious rebound in the second half of the year such that
our growth projection to December 2010 would be 8,1%.
"This is underpinned by a serious rebound in agriculture, where we had said
growth will be 18,8%, we think that agriculture will grow by 34,1% largely
as a result of a strong performance in tobacco where 120 million kgs have
been delivered, manufacturing 4,2%; mining 44% and tourism 6,5%," Biti said.

Initially Biti had revised downwards the growth projections to 5,4% in the
midterm review in July from the 7,7% he had earlier projected.
The International Monetary Fund has projected that Zimbabwe would record a
real GDP growth of 2,2% this year and zero growth next year.

Biti said inflation - once the country's number one enemy - is under check
as month-on-month inflation between June to August was -0,1% meaning that
the country was on course for an inflation target of 4% in December.

But the minister warned that treasury was constrained and the concept of
cash budgeting would continue. "We have to eat that which we have killed, we
have to live within our means and in achieving fiscal discipline given what
others call a shortage economy, that is, a situation where there is high
demand, huge expectations and low fiscal space it means that the art of
crafting a budget requires serious fiscal marksmanship," Biti said.

He said focus would be put on utilities and infrastructure but it was
difficult for treasury to meet the country's competing needs adding that the
economy had survived up to this stage by the grace of God.

"We are trying to work on an Irrigation Master Plan and the total cost of
that plan is US$7 billion against a budget of US$1,9 billion.
"Our debt situation is US$7 billion, the total budget from our revenue is
US$1,9 billion.

"Just to attend to short term electricity requirements that will require
Zimbabwe to generate electricity at 50% requires US$400 million," he said.
Biti's growth projections came at a time government has admitted that it has
achieved 60% of what it undertook to accomplish in the GWP, according to
Prime Minister Morgan Tsvangirai.

"It looks like we've achieved - or are on track to achieve - only 60% of
what we undertook to do in the GWP.

"I don't want to pre-empt the reports and discussions on why that is, but I
do want to say that I find this a little disappointing," Tsvangirai said.
The GWP outlines the priorities, objectives and targets which government has
committed itself to deliver, within the limitations of time and resource
constraints.

Zimbabwe requires capital to kick-start the economy which suffered a decade
of decline when the political environment went downhill.
According to the three year Macro-economic Policy and Budget Framework,
Zimbabwe requires US$29, 8 billion to finance requirements in the three
years up to 2012.

Of the amount US$9,3 billion is required this year, US$10,4 billion next
year and US$10 billion in 2012.

BY NDAMU SANDU