adminbe addressed to achieve set targets.
In its monthly economic report for September 2011, the bank said the economy should address liquidity challenges, power cuts, electricity tariff hikes and price increases caused by the reintroduction of import duty on a number of some basic commodities.
The country’s economy is expected to expand by 9,3 percent this year buoyed by increased production in mining and agriculture.
But the regional financier said recent increases in transport and education costs were likely to maintain pressure on inflation.
“The re-introduction of import duty on some basic commodities led to price increases for these commodities,” said the bank. “The price hike, if not reversed, could militate against the achievement of the year-end
inflation target of 4 percent.
“There is need to address these price hikes, given that the import duty reintroduction was aimed at protecting local producers against cheap imports in a bid to support local industry.”
On a month-to-month basis the rate of inflation declined from 0,3 percent in July to 0,1 percent last month. Notwithstanding this development, inflationary pressures still persist in the economy, particularly with the recently announced hike in electricity tariffs.
With effect from this month, Zesa introduced a 31 percent increase on electricity tariffs, resulting in an increase in the average tariff from US7,5c per kilowatt hour to US9,83c per kilowatt hour.
According to Zesa the new rates are expected to sustain its operations and revive its collapsed infrastructure, caused by sub-economic tariffs.
Zimbabwe’s fiscal performance still remains a threat after collecting US$1,5 billion in the first seven months of the year as non-tax actual revenues – still below target.
Total actual expenditure during the period under review amounted to US$1,2 billion with employment costs averaging US$144,6 million. This means Government has to raise an additional US$188,3 million to cover the increase in employment costs.
Analysts say Government might be forced to compromise the capital budget, as already reflected in the under-performance of capital expenditure.
“Continued underperformance of the capital budget may have a negative impact on the realisation of a growth target of 9,3 percent in 2011,” aid the bank.
“This means that there is a need to mobilise more non-tax revenues and at the same time ensure growth-enhancing capital expenditures are scaled up to target level, if the growth target of 2011 Budget is to be achieved.”
The economy in 2011 will continue to be driven by agriculture and mining.
A total of 131,4 million kg of tobacco valued at US$359,6 million were sold during the selling season, compared with 119,8 million kg valued at US$247,8 million delivered during the last corresponding period.
But deliveries realised in 2011 fell short of 170 million kg projected for the year. Tobacco deliveries marginally improved 9,6 percent.
In mining, metal prices have continued to increase, giving impetus to the sector that is expected to grow by 44 percent this year.
Online Reporter