18 January 2018
   
LATEST: Bennett in fatal chopper crash?
Disciple politically unruly chiefs: group
Polls in '4 to 5' months: Mnangagwa
$430k cocaine woman blames Brazil firm
Tobva tadii paya trio bailed after 3mths
Businessman fleeces clinic of $27,000
Soldiers deployed all over rural Zim: MDC-T
MDC-T’s Mudzuri begs ZCTU for support
MORE NEWS
Bond notes here to stay, says Chinamasa
South Koreans in $70m Zim agro-project
MORE BUSINESS
Hubby bashes Star FM anchor in love row
$18/yr subscr too much for musicians
MORE SHOWBIZ
Zimbabwe beat Sri Lanka in thriller
Caps bid to rehire star forward Nhivi
MORE SPORTS
A view beyond the Zimbabwe coup
'Shit-hole': Just Take moral high ground
MORE OPINION
 
Economy: the need for a paradigm shift
Trump rage ignores truth: A response
MORE COLUMNISTS
 
 
Stick to revised fiscal plan, IMF urges govt
14/07/2014 00:00:00
by Business Reporter
 
Currently in China ... Finance Minister Patrick Chinamasa
 
RELATED STORIES
Minerals to back $10b China loan, Mugabe
Partying Bob adamant economy mending
Ditch US$ for South Africa Rand, says Biti
Industry not feeling Bob’s claimed recovery
Chinamasa defends Mugabe economy claim
Economy: Chinamasa blames US dollar
Troubled economy on the mend, Mugabe
IMF gives Chinamasa passing grade
Economy: Chinamasa’s cause for optimism

THE International Monetary Fund (IMF) has urged the government to fully implement its revised fiscal plan for 2014.

Government has identified revenue measures and expenditure cuts, and plans to roll over a fraction of domestic maturities falling due. If fully implemented, these measures could result in a budget surplus of approximately 1½ per cent of GDP in 2014.

However, the IMF said while efforts to face the financing requirements were commendable, the mix of measures proposed seemed to rely excessively on spending cuts.

These cuts may further depress prospects for the economy in the short and medium term (as they include drastic reductions in capital spending), and do not appear sustainable.

Finance Minister Patrick Chinamasa is expected to present his mid-term review when he returns from China next week.

This comes as the  Confederation of Zimbabwe Industries (CZI) is projecting that capacity utilisation will decline to about 30 percent this year from 39.6 percent recorded in 2013 while statistics from ZCTU show that 2,065 employees lost their jobs in the six months to June.

This was on the back of continued weakness in the operating environment characterised by significantly depressed demand on the domestic market and weakening of competitiveness of many domestic producers due to the fall in value of South African Rand against the United States Dollar during the 2012/13 period.

The manufacturing sector has been hit hard by the sharp appreciation of the US dollar, the main currency in use in the country, with the IMF estimating an over-valuation of the Zimbabwe’s exchange rate of between 17% and 24%. This, according to the IMF, makes the economy highly uncompetitive against imports.

In addition, the manufacturing sector was also hit by erratic power supplies meaning firms had to invest in generators, thereby pushing up the cost of production.

"This has ultimately made local products uncompetitive to those in the region," said the Ministry of Finance in its economic report for May.

The shortage of long-term financing has also made retooling a tall order leaving companies stuck with antiquated equipment. This has also increased the cost of production.

The ministry notes that, in the outlook, the manufacturing sector depends on the speed with which economic actors and policymakers move to implement policy initiatives designed to increase capital inflows into the country.



Advertisement

There is also a need to improve the business environment in Zimbabwe to enable local manufacturers to improve their competitiveness.


 
Email this to a friend Printable Version Discuss This Story
Share this article:

Digg it

Del.icio.us

Reddit

Newsvine

Nowpublic

Stumbleupon

Face Book

Myspace

Fark

 
 
 
comments powered by Disqus
 
RSS NewsTicker