Gono puts faith in economic recovery

Gono puts faith in economic recovery

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By Cris Chinaka

ZIMBABWE'S struggling economy is set for a "dramatic" recovery in the next two to three years on the back of expected growth in mining and commercial farming, central bank governor Gideon Gono said on Wednesday.

Zimbabwe's economy has shrunk by more than a third during a recession which has lasted for eight years, with inflation running at a world record of nearly 1,200 percent and unemployment estimated at about 70 percent.

Gono aims to tackle the meltdown, which has been worsened by the withdrawal of international support over policy differences with Harare, particularly President Robert Mugabe's forcible redistribution of white-owned commercial farms among blacks.

Zimbabwe's biggest challenge was to rebuild confidence and mobilize investment around its natural resources, the governor said in an interview.

"We are working quietly and fighting very hard on several fronts to rebuild (business) confidence, to boost both domestic and external investment in mining and commercial agriculture," he said.

Gono declined to discuss what new investments were in the pipeline, but analysts say Zimbabwe appears to be banking on inflows from Asia under a 'Look East' policy which Mugabe has adopted after his isolation by Western donors.

"We are not going to give out any details at this stage, but I can safely say that in two to three years' time, this economy will be back on its feet, strong and robust and a model of a turnaround programme," Gono said.

"We are setting the stage for a dramatic turnaround, although this might sound incredible because the economic statistics currently on the ground do not support such an outlook," he added. He gave no further details

The World Bank says Zimbabwe, once the breadbasket of the region, has the fastest shrinking economy outside a war zone.

Critics say Gono has failed in his efforts to tame rampaging inflation since his appointment in December 2003 but the governor said on Wednesday he regarded missed targets as temporary setbacks, not failures.

Under a national economic development priority programme launched in April, the government hopes to stabilize the fragile Zimbabwe dollar, which is trading at four times its official value on an illegal parallel market.

The plan also aims to improve food security and revive crumbling industries, now operating at 30 percent capacity.

Gono declined to discuss details of the programme or say how he aimed to boost forex inflows, reduce inflation or meet growth targets, saying it was too close to the unveiling of his second monetary policy statement for the year, expected in July.

But he hinted that the central bank could be planning another crackdown on the black market in foreign exchange, similar to one that forced several top business executives to flee the country two years ago for fear of arrest.

"We are working on a number issues...and those who are involved in the parallel market should not cry foul when the law catches up with them," he said - Reuters
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