ZIMBABWE’S economy will grow by between 3,1 percent and 6,4 percent this year driven by a recovery in agriculture which recorded its highest cereal output in five years, finance minister Patrick Chinamasa told Parliament on Monday.
The World Bank and the central bank have projected a gross domestic product (GDP) growth of three percent this year, citing weak performance by key sectors and overall disappointing growth in the first quarter.
But cereal production for the 2013/4 season is estimated at 1,7 million metric tonnes, about 85 percent higher than the prior year and the highest in five seasons, according to the Ministry of Agriculture’s second round crop assessment report seen by The Source.
Maize output is at 1,456 million tonnes, 82 percent more than the 798,600 tonnes in the 2012/13 season, with the rest made up of small grains.
Zimbabwe requires 1,430 million tonnes of cereals annually, leaving a surplus of 253,000 tonnes.
“So far I can confidently say that agriculture has performed well notwithstanding the constraints,” Chinamasa said when he appeared before a Parliamentary portfolio committee on finance and economic planning.
“For instance let’s just take tobacco, the target was 180 million kilogrammes but output is now at 210 million kg. In terms of growth, that is quite good.
“Maize also has a surplus, soya beans as well as sugar beans. So agriculture did reasonably well and I think the expectations we had about agriculture will materialise.”
Tobacco and soya output were also above expectation, he added.
He said mining growth was beholden to fluctuating mineral prices but could still enjoy growth by year end.
“So for now I want to say (the economy may not grow by) six point something but not as low as being put out,” he said.
Chinamasa said liquidity constraints, a huge debt overhang and perceived high country risk was militating against economic growth, but discounted claims that a bloated public service wage bill, which takes up to 70 percent of its public expenditure, was reducing fiscal space.
Chinamasa said government will pursue targets agreed under the International Monetary Fund’s staff monitored programme (SMP).
He said multilateral financial institutions, jointly owed nearly $10 billion by government should consider extending more credit to productive sectors and improve treasury’s capacity to repay the external debt.Advertisement
“Currently we have no capacity to service loans. If they were good creditors, they would give us fresh capital for the productive sector so that we build our capacity to repay them,” he said.
The finance minister said he is also considering placing the state pension scheme under the supervision of the Insurance and Pension Commission to improve its support to key economic sectors.
The National Social Security Authority has in recent times been criticised for extending credit to weak financial institutions at a time the manufacturing sector requires urgent funding.
Commenting on the financial services sector, Chinamasa said the central bank is working on measures to address the high level of non-performing loans (NPLs) to restore confidence in the banking sector although he said NPLs had no systemic risks to the sector.
“We have to address hygienic factors militating against confidence in the banks,” he said.