Home » Entertainment » AFDB SAYS ZIMBABWE’S ECONOMIC REVIVAL DEPENDS ON POLICY IMPLEMENTATION, RE-ENGAGEMENT

HARARE� The African Development Bank (AfDB) says Zimbabwe may achieve higher than projected growth this year on the back of positive sentiment following the change of administration in the country, aided by support from the country's creditors.

The continental bank had earlier projected a growth rate of 1.0 per cent for the economy in 2018 and 1.2 per cent in 2019. However, the installation of a new government late last year, plus the positive sentiment coming with it and pronouncement of a reformist budget and re-engagement with the international community could yet boost the country's growth prospects, the AfDB says in its Southern Africa Economic Outlook for 2018.

The budget presented to Parliament offered glimmers of hope to investors on prospects of new reforms, especially on minimal investment thresholds for external investors. But the economy is still experiencing

financial constraints, and debt remains high, with accumulated arrears, it said.

So, real GDP (Gross Domestic Product) growth is projected to remain weak at one percent in 2018, with a marginal gain of 0.2 percentage point the following year. This projection could be reversed however, depending on the outcome of the budget pronouncements and the country's re-engagement with the international community, especially its creditors.

The Zimbabwean government has forecast economic growth projection for 2018 at 4.5 per cent.

The southern Africa sub-region is expected to grow by 2.0 per cent this year, up from 1.6 per cent in 2017 and by 2.4 per cent in 2019. The AfDB said high fiscal deficits in the sub-region were impeding on growth.

Governments should put in place measures to improve the mobilization of domestic resources and funds from the private sector to ensure adequate levels of development spending, stimulate growth and create

jobs, especially for young people," said Stefan Muller, AfDB senior economist for Southern Africa.

The sub-region's fiscal deficit is estimated to have widened to 5.0 per cent of GDP in 2017, with Mozambique, Zimbabwe, Zambia and Swaziland having rates of above 7.0 per cent of GDP, with the norm set at 3.0 per cent.

Only Botswana and Lesotho returned to surplus, estimated at 0.3 per cent and 0.1 per cent of GDP.

The AfDB said Zimbabwe and other low income countries in the region such as Malawi and Madagascar should take measures to improve their low tax-to-GDP ratios through, among others, broadening the tax base by formalizing informal businesses as well as reforming and strengthening tax administrations and tax inspections to ensure tax compliance.

Source: NAM NEWS NETWORK

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