IMF predicts sluggish growth in 2014

Published: 15 July 2014

The International Monetary Fund (IMF) says it would be hard to see a vigorous economic recovery in 2014 due to the weak economic momentum coming out of 2013.

The Bretton Wood institution projected agricultural and mining exports to accelerate in 2014 spurred by another strong tobacco season and increased output of gold and platinum.

The strong performance of the two sectors is expected to offset the continued shrinking of the industrial sector, under pressure from competing imports from South Africa.

"Growth is projected to be sluggish over the short to medium term. A comprehensive and determined reform program would be necessary to foster investment, especially foreign, and boost productivity beyond the baseline.

"…The current account balance should improve over the medium term as export capacity increases, but the current account deficit is expected to remain high, averaging around 15% of GDP in the medium term," the IMF said in a current report following the annual Article IV consultation.

The IMF said the staff welcomed recent steps to increase diamond revenue transparency and urged authorities to speedily implement the announced measures to mobilise diamond dividends, including by defining a clear date to lift the current suspension on them.

"Staff encourages the authorities to also consider tax reforms in line with previous Fund TA recommendations (for example, by increasing excises on some alcoholic beverages and by changing the value added tax status of some goods from zero-rated to exempt," it said.

The staff further encouraged the government to identify additional potential revenue and financing sources which may need to be mobilised if risks to current revenue projections materialised. The financier announced that despite the challenges the country was facing, government authorities had continued to make regular payments to the International Financial Institutions (IFI).

Zimbabwe has been making monthly payments of $150 000 to the IMF's PRGT, and also making quarterly payments to the World Bank of $900 000 and $500 000 to the AfDB.
- Zim Mail

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