IH Securities bemoan Zim’s expected 300 000 tons maize output deficit

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By Alois Vinga

THE figures projected in the recently unveiled Mid Term Budget Review forecasting a constrained agricultural productivity output, will prompt a 300 000 maize deficit output, home grown financial services boutique firm
Inter-Horizon Group (IH Securities) has revealed.

The remarks follow projections that agriculture, one of Zimbabwe’s key economic drivers, will suffer decline due to natural causes.

“Government forecasts agricultural output is now below earlier expectations given erratic, unevenly distributed rains with maize expected to come in 43% lower than the previous harvest leaving a deficit of at least 300 000 tons,” said the financial services firm.

Currently listed among the globe’s hunger hotspots, the recent projections hint that Zimbabwe may not be moving out of the grain deficit pit anytime soon.

While the mining sector is expected to grow by 9,5% revised up from 8% in 2022 benefiting from favourable international commodity prices, reopening of closed mines and increased exploration by the private sector, the
securities firm also warned that the high cost of doing business, erratic power supply and archaic machinery will remain major hindrances to high productivity.

The hospitality industry is expected to recover by 50% (revised from 19%).

“The growth prospects for the economy are, however, heavily dependent on currency stability, moderate inflation and policy stability.

“Year to date the parallel rate has deteriorated by 253% to US$1: ZWL$760 representing a 72% premium to the auction rate of US$1: ZWL$440. M-o-m (month on month) inflation accelerated to 30% in June crystalising the
hyper-inflation status,” said IH Securities.

The firm observed that the revised budget deficit for the year 2022 is now expected to come in at ZWL$157,5 billion from the previous target of ZW$76,5 billion, which remains within the targeted 1,5% of the Gross Domestic Product (GDP), which will be funded through issuance of government securities, utilisation of the country’s SDR allocation and external loans.

The 2022 National Budget projected revenues of ZW$850, 8bn for the year.

However, indications are that ZW$1, 74 trillion which is 16,6% of the GDP will be realised by December 31 primarily driven by value added tax (replacing Corporate Income Tax as the lead driver, this revenue head came in below target).

Collections are projected to increase in line with inflation expectations.

With the focus on expenditure containment, employment costs have been marginally increased from a targeted 6.7% of GDP to the now projected 7.9% of GDP.