FINANCE minister Patrick Chinamasa on Thursday projected 6.1 percent economic growth next year despite the country’s failure to meet its economic targets this year amid a perennial cash crunch.
Presenting a $4.4 billion budget (See full statement here) for 2014 to parliament, Chinamasa said the economy was expected to record “strong growth of about 6.1 percent… anchored on the strong recovery of agriculture (and the) improved performance of the mining and construction sectors.”
The mining sector would grow by 9.0 percent spurred by rising prices and expectations of significant returns at one of the world’s largest diamond fields in the eastern Marange district, he said.
The construction sector would register an 11 percent growth driven by private and state housing projects, the government said.
Chinamasa admitted the economy was “saddled with severe socio-economic problems” including a fragile treasury, erratic power supplies and lack of clarity over the country’s black empowerment law.”
Zimbabwe came short of meeting its growth target for this year which was initially put at 5.0 percent before the government revised it downwards to 3.4 percent and even further down to 2.9 percent.
Chinamasa blamed the poor economic performance on lack of capital and low earnings from the mining sector and urged a push to end speculation on the so-called indigenisation law.
“We are expecting clarity and consistency in the implementation of the indigenisation policy to build confidence,” he said.
Zimbabwe’s indigenisation laws forcing foreign companies to sell 51 percent shares to local investors has caused consternation among foreign firms and scared away investors.
Chinamasa said the government would fund $100 million to banks through the central bank in a bid to restore confidence in the finance sector.
He said most people preferred stashing their savings under mattresses as banks were struggling to stay afloat.
In recent weeks some banks have run out of cash and have seen depositors waiting in long queues as the banks reduced daily cash withdrawal limits.
On Monday angry depositors forced their way into a banking hall and attacked a manager in the capital after a bank ran out of cash.Advertisement
The minister ruled out any return in the near future of the Zimbabwe dollar which it trashed in 2009 after inflation peaked at 231 million percent.
Chinamasa instead said the government plans to allow the use of foreign currencies. The US dollar and the South Africa rand are the most commonly used currencies in the southern African country.