Zim needs US$2bn for infrastructure

Speaking at the Zimbabwe National Chamber of Commerce congress in Victoria Falls yesterday, Dr Kanyenze said most of the National Budget was going mostly to consumptive expenditure such as civil servants salaries and wages and other costs.

“Sixty-five percent of the (National) Budget is going to less than 3 percent of the population. A resource envelope of US$2 billion is required (for key projects, which is) 56 percent of the National Budget,” said Dr Kanyenze.

Dr Kanyenze made the remarks at the congress on Zimbabwe’s economic policy mix and the need to reform the economic policies.

He said the issue of investment in areas that mattered the most should be addressed urgently as Zimbabwe was doing badly even by regional standards.

“That structure of the (US$3,6 billion) is not developmental. The Budget is not going to things that matter such as infrastructure, hospitals, education and critical Government operations,” Dr Kanyenze said.

He said that the country needed to reform its economic policies to rejuvenate economic growth that has been slowing down since 2011. The country’s economic growth and investment figures that grew at tremendous pace following dollarisation in 2009 have been going down significantly.

After the adoption of the multi-currency regime, dominated by the US dollar, Zimbabwe’s economic growth skipped from contraction in 2008 to 5,1 percent in 2009, 9,6 percent in 2010 and 9,4 percent in 2011. However, annual economic growth has moderated to 4,4 percent in 2012 and is projected at 5 percent this year and fall further to 4 percent by 2017.

The country showed huge potential for sustained high level economic growth although this was somehow illusory for a country coming from a low base.

At dollarisation in 2009, Dr Kanyenze said, the country’s inflation plunged to deflation then single-digit rate, now way below 5 percent, revenues doubled from 16 percent of Budget to 36 percent in 2012 while investment grew from 2 percent in 2008 to about 9 percent of GDP in 2011.

“The gross domestic product growth rate is moderating and that is a challenge. That rebound is moderating around 5 percent per annum,” he said.

“At the turn of the century Zimbabwe’s GDP was actually negative. We had a slowdown when commodity prices were actually strong,” he said.

Unfortunately, the country started experiencing strong recovery growth when world commodity prices were either volatile or actually going down.

The economic meltdown that Zimbabwe suffered owing to the illegal economic sanctions imposed by the US and its allies has seen the country’s economy being ranked 11 out of 14 in Sadc.

Despite the significant improvement since 2009, a number of economic indicators are still not commendable by international standards and this includes only 10 percent foreign exchange cover, which means Zimbabwe was vulnerable to unforeseen external shocks.