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In his 2012 national budget presentation Finance Minister Tendai Biti said Zimbabwe’s economy was expected to grow by 9,4 percent from a projected 9,3 percent in 2011.
The African Development Bank (AfDB), in its December 2011 economic review, indicated the need for a stable political and economic environment to boost foreign investors’ confidence in the country’s economy.
“The ongoing implementation of the Indigenisation and Economic Empowerment laws and the expected national elections in 2012 continue to weaken external investor confidence,” the AfDB said in the report.
AfDB said the achievement of Zimbabwe’s economic targets was dependent on steady power and water supply.
While giving oral evidence before a Parliamentary Portfolio Committee on Mines and Energy last month, Zesa chief executive officer Engineer Josh Chifamba said Zimbabwe should brace itself for continued load-shedding for the next four years.
He said Zesa was facing challenges, among them vandalism of its infrastructure worth $800 000 per month, a huge debt overhang, low installed capacity and general dip in the availability of power in the region.
Government is yet to secure investment to bankroll its $2,5 billion five-year plan to expand and rehabilitate Hwange and Kariba Power stations.
In the 2012 national fiscal policy statement, Minister Biti allocated 20 percent of the total budget ($800 million) for capital expenditure and this remains inadequate compared to infrastructure funding requirements and spending targets projected under the Medium Term Plan.
In this year’s budget, energy and water and sanitation were allocated 1,2 percent and 2,8 percent respectively of the $800 million, despite the challenges faced by these economic enablers.
AfDB said the weak depositor confidence in Zimbabwe’s banking sector and low average incomes, overall assessment of risk, among other factors, spells the persisting liquidity crunch.
To ease the liquidity crisis in the economy, Minister Biti allocated $100 million to the Reserve Bank so that the institution’s lender of last resort function could be restored as well as relieving the presently limited inter-bank lending.
AfDB said: “This amount is, however, too small to ease the prevailing liquidity shortages (and) there is need for measures to restore bank depositor confidence in the formal banking sector to harness cash that is circulating outside the formal banking sector into the formal banking sector.”
Online Reporter