Mthuli Ncube projects 10% inflation decline by year end

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By Alois Vinga

FINANCE Minister, Mthuli Ncube says the inflation rate will end the year 2019 at 10% with an expectation that it will reduce further to a single digit by the end of 2020.

According to the 2020 pre-budget strategy paper the Treasury boss hinged the inflation decline prediction on the strengths of outlawing the multi-currency basket.

“Following the adoption of mono currency in June 2019, supported by further strengthening of both fiscal and month-on-month inflation retreated to 21% by July 2019 and further down to 18% by August 2019.

“With continued implementation of fiscal and monetary policy reforms and other structural policies, inflation on monthly basis is expected to stabilise around 10 % by end 2019 and at 2.3 % by end of 2020.”

The remarks come shortly after the International Monetary Fund’s recent report indicating Zimbabwe’s monthly inflation reached 300 % in the month of August this year, becoming the highest globally.

Ncube predicts further that Gross Domestic Product is projected to grow by 5% to $209.3 billion in 2020, as revenues are expected to hit $24.8 billion with expenditure estimated at $28.5 billion creating a budget surplus of $4.1 billion.

The strategy paper claims that cumulative merchandise exports for 2019 up to July increased by 7.2%, from US$2 billion during the same period in 2018, to $2.1 billion despite a decrease in gold exports, and largely on account of nickel and tobacco.

At the same time, merchandise imports for the period under review sharply declined by 21%, from US$3.6 billion recorded in the comparable period in 2018, to US$2.8 billion in 2019.

However, in 2020, exports are projected at US$5.5 billion with imports growing to US$6.6 billion on account of higher imports of essential inputs and equipment, including electricity and fuel.

Cumulative revenue collections for the first half of the year 2019 stood at $4.99 billion, against a target of $4.15 billion, giving a positive variance of 20.2%.

Similarly, expenditures for the same period were $4.2 billion, against a target of $3.7 billion, which is $532 million over expenditure of 15%.

A positive rainfall season forecast combined with the above factors, is expected to see agriculture rebound and growth of 10.3% in 2020 against a backdrop of sustained growth and stability.

Added Ncube: “While the 2020 national budget will continue to consolidate macro-fiscal stabilisation gains made in 2019, the thrust will now shift to the following areas, growth and productivity; job creation; competitiveness; and promotion of more sustainable and shared development.”