By Alois Vinga
GLOBAL financier, the World Bank (WB) has heaped praise on Zimbabwe for continuously implementing bold economic reforms more recently saying the initiatives had positioned the economy for a sound performance.
The remarks come on the back of implementation of a raft of measures, which include mopping up of excess liquidity, cutting down on reckless money supply into the economy, curbing speculative and unproductive borrowing.
Among other measures, the Reserve Bank of Zimbabwe (RBZ) also moved to introduce gold coins, which have gone a long way to create an alternative investment avenue as opposed to the past culture where both corporates and individuals would chase after scarce foreign currency which in the process triggered inflation.
Acknowledging the positive economic impact, WB’s report published Friday titled, ‘The Zimbabwe Country Economic Memorandum (CEM), Boosting Productivity and Quality Jobs’, hails the measures.
“Recently, economic management has been bolstered to a large extent by a tight fiscal policy, in particular the management of central government finances. In a difficult external environment, the government has implemented some prudent fiscal consolidation cantered on revenue enhancement and austerity measures,” said the report.
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The global financier pointed out that introduction of the Intermediated Money Transfer Tax (IMTT) by treasury chief Mthuli Ncube had enabled improved revenue collection, making more room for public infrastructure spending at a time when unsustainable public spending has been adjusted downward.
“A costly public wage bill was reduced from a peak of around 13,6% of the Gross Domestic Product in 2017 to 7% of GDP in 2020 and 2021.
“Similarly, support to the agriculture sector, as well as subsidies, were downsized and became more transparent. As a result, fiscal deficits of the central government were reduced from an average of 8,4% of GDP in 2016–18 to less than 0,5% in 2019–21,” the report said.
As a result, the report observed that this fiscal adjustment has enabled the government to re-prioritise expenditure, consolidate finances, and expand public investment resulting in the freeing-up of fiscal space allowing authorities to recently increase public investment spending.
The bank credited increased public investment for aiding infrastructure projects such as new roads and thermal power stations, despite the difficult economic environment.
“Moreover, the government has begun consolidating its finances, discontinued borrowing from the Reserve Bank of Zimbabwe (RBZ), and significantly reduced quasi-fiscal activities (QFAs) since 2019.
“Furthermore, the issuance of Treasury Bills (TBs) has been limited to smooth cash flows and restructured maturities, moving away from the private placement of TBs to a pre-announced calendar for the issuing of TBs,” the WB report added.