Treasury chief lowers 2022 growth forecast on world economy, farming

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By Reuters

HARARE: Zimbabwe’s finance minister lowered this year’s economic growth forecast to 4.6% from 5.5% in a budget review presented on Thursday, but he saw growth picking up to 5% next year.

In a speech in parliament, Mthuli Ncube linked the lower 2022 forecast to the global economic environment and domestic factors like reduced agricultural output.

But he said preliminary figures from the first half of the year showed a better budget performance than expected, with a deficit of 27.9 billion Zimbabwe dollars ($63.5 million) against a target of 45 billion Zimbabwe dollars.

When the 2022 budget was presented in November Ncube gave a deficit target of 1.5% of gross domestic product (GDP).

He did not give an updated target on Thursday but said Zimbabwe would aim for a deficit of below 3% of GDP in 2023.

Ncube flagged the depreciation of the Zimbabwe dollar and rising inflation among concerns but said the government was committed to addressing them.

The southern African nation’s central bank has more than doubled interest rates to 200% in a bid to control runaway inflation, which hit around 192% in June. It has also outlined plans to make the U.S. dollar legal tender for the next five years.

To support revenue collection, Ncube also on Thursday proposed raising the platinum royalty rate to 5% from 2.5% from the start of next year. The 5% rate would also apply to lithium, he said.