Zimbabwe budget forecasts 2.7% growth in 2016; 92% of budget still spent on govt wages

Zimbabwe’s Economic Development Minister Patrick Chinamasa said on Thursday the country’s economy would grow by 2.7 percent in 2016, after he rolled out measures aimed at addressing a deepening economic crisis.

Zimbabwe’s economy is expected to grow by 1.5 percent this year, after initially being projected to grow by 3.5 percent.

Announcing the US$4 billion 2016 National Budget in Harare, Chinamasa said confidence boosting measures taken this year, such as the ongoing Staff Monitored Programme with the International Monetary Fund, reforms to improve the ease of doing business being spearheaded by the Office of the President and Cabinet, and efforts to clear U$1.8 billion of the country’s US$7 billion external debt by June, would help the economy to recover.

He said projected growth in mining, tourism, construction and the financial services sectors would drive growth next year.

Projected revenue in 2016 is expected at US$3,85 billion, which will translate into a budget deficit of US$150 million during the period.

“In 2016, GDP (Gross Domestic Product) growth is projected to rebound to 2,7 percent, mainly on account of mining, tourism, construction and the financial sector,” Chinamasa said.“Agriculture is expected to recover by 1,8 percent though adequate planning on mitigating the impact of the El-Nino weather will be essential. The successful resolution of Zimbabwe’s external payment arrears is expected to disseminate positive signals to investors and lenders. In this regard, the perceived country risk premium that has made credit lines to Zimbabwe unaffordable should be reduced significantly.