AfDB projects 8pc growth

Finance Ministry’s forecast of 9,3 percent.
In its monthly economic review on Zimbabwe, the continental bank said economic growth would be anchored by anticipated growth in the mining and agricultural sectors.
The International Monetary Fund projected the economy to grow by 5,5 percent this year.
The AfDB said Zimbabwe, among the top 10 fastest-growing countries in Africa in 2011, has continued to show signs of strong recovery.
AfDB Zimbabwe’s resident representative Dr Mahamudu Bawumia said current growth environment should be maintained and eliminate economic vulnerabilities.
The economy rebounded in 2009 after the introduction of the multiple currency system to register a growth of 5,7 percent.
The economy grew by 8,1 percent last year on the back of sound macroeconomic stability, cash budgeting and the resuscitation of key sectors of the economy.
“The mining sector has emerged as the anchor of the economic recovery process in Zimbabwe,” the bank said.
“Favourable international commodity prices for gold, nickel, platinum, and copper improved the viability of mining concerns and resulted in the rejuvenation of operations.”
Against this background, mineral output increased for gold (16,4 percent), diamonds (9,3 percent), platinum (8,6 percent and chrome (6,5 percent).
The bank says over the period January to April 2011, Government realised revenues amounting to US$859,5 million, culminating into a surplus of US$142, 6 million.
But given the growing wage demands by civil servants, the surplus realised during the period might be artificial.
“In view of outstanding obligations incurred, the surplus position is not likely to be sustained during the remainder of the year,” said the bank.
Annual inflation has remained favourably low with rates in the region and in line with the single digit level targeted under the Sadc Macro-economic Convergence Programme.
The low inflation rate is attributed to deceleration in both food and non-food inflation.
Rising international oil prices, coupled with the firming of the South African rand is expected to continue to generate adverse inflationary pressure in the economy.
AfDB said the banking sector was still experiencing persistent liquidity shortages, lack of depositor confidence, low savings, low average deposit rates and high average lending rates.
The market is also experiencing short-term nature of deposits, laxity in bank regulation and supervision, poor corporate governance and limited lender of the last resort facility at the central bank.
“Generally, these challenges imply potential slow recovery of the banking sector. In the long-term, this is likely to have implications on the overall recovery of the economy,” said the bank.
The recent Renaissance Financial Holdings default loan repayment and the revelation by the RBZ of shareholding, board and corporate governance flaws, irregular inter-company transactions and undercapitalisation may reflect attendant banking sector vulnerabilities.