Zim growth to slow
Harare – Zimbabwe could fail to meet the five percent growth rate forecast in the 2013 budget after the country missed revenue targets for the first quarter of the year.
Compounding the problem is the expected slump in production of the staple maize crop due to erratic rains, which means the country will have to import a substantial amount of food.
In an update on the state of the economy last week, Finance Minister Tendai Biti said the macro-economic environment remained stable although there were several downward risks that could affect growth.
“The weaknesses are reflected through liquidity and financing challenges, limited revenue growth, as well as widening of the current account gap emanating from depressed exports and overdependence on imports,” said Minister Biti. “As a result, capacity utilisation of most productive sectors remains well below potential, dampening prospects of economic recovery.”
A total of US$765 million was collected against a target of US$825m in the first quarter of 2013.
“The underperformance of revenues, against the background of high employment costs, some critical external loan repayment obligations, the referendum, elections and the unbudgeted for new requirements in support of grain importations, all pose major pressures on the budget,” said Minister Biti.
Maize output is expected to be 900 000 tonnes against national annual requirements of close to 1.5 million tonnes.
The country requires about US$51m to import 150 000 tonnes of grain with the government saying it will provide US$5m for food assistance needs. Private buyers are expected to cover the rest of the import needs.
Of the total revenue in the first quarter, tax inflows accounted for US$739.1m against a target of US$780.2m, while non-tax revenue was US$26m.
Diamond revenues contributed about US$5m against a US$15 million target, Minister Biti said.
The minister said the government had paid US$77m towards retiring external debts.
The public service wage bill absorbed 75 percent of the total revenue generated, while US$51.6m was disbursed for capital projects.
Inflation was contained below three percent; recorded at 2.5 percent in January, 2.98 in February, and 2.76 percent in March.
Concerning key productive sectors, mining performed within the 2013 National Budget targets but agricultural yields are expected to be below forecasts due to shorter rainy season.
The trade deficit in the period under review widened; with imports at US$1.7b, outstripping exports at US$689m. This translates to a trade gap of more than US$1b.
Minerals contributed to the bulk of the export receipts at US$473.6m. Platinum dominated mineral exports (US$210m), followed by gold (US$124m), and diamonds (US$113.7m).
Meanwhile Minister Biti said at least US$132m is needed to fund elections that are expected by June 29 this year.
The initial budget was US$254m but has been reduced through cost cutting measures. Further budget cuts could see it fall to a more realistic figure of less than US$40m.
The government has engaged the United Nations for financial assistance, but disagreements over terms of reference a team expected to assess the country’s needs has stalled talks.
The UN team wants to deliberate with government officials, political parties and NGOs on the budget. The government, however, insists that such matters should be confined to the counsels of government ministries and departments.