via Zim economy heading towards 2008 levels – central bank official | The Source May 29, 2014
Zimbabwe needs to make ‘crucial’ policy decisions now to save the economy from sinking to worse levels than experienced during the hyperinflation period of 2008, a central bank official said on Thursday.
The country’s annual inflation reached 500 billion percent in December 2008 at the height of a political and economic crisis, forcing the government to abandon the local currency in favour of multiple foreign currencies – mainly the United States dollar and South Africa’s rand – in 2009.
Finance minister on Wednesday said Zimbabwe will demand 100 percent local control of its minerals and land under planned changes to its black economic empowerment law, which has largely blamed for keeping some foreign investors away.
Reserve Bank of Zimbabwe (RBZ) senior division chief, Simon Nyarota said the economy will sink into the negative territory in the next year if the current decline was not arrested.
“(The economy) is going to decline and it will be similar to the 2007/08 but this will be worse because we are dollarized so we do not have anything or a policy that will stabilise the economy immediately like what happened in 2009,” Nyarota told industrialists at the Confederation of Zimbabwe Industry annual meeting.
The economy is stuttering after struggling to attract investment in the aftermath of elections last July that extended President Robert Mugabe’s 33-year rule. Government predicted a 6.1 percent GDP growth in 2014, but the World Bank and the central bank have projected a 3.1 percent growth due to the underperformance of key sectors such as agriculture and mining.
Nyarota said the country debt arrears, estimated at $10 billion, were still growing due to failure to service the debt.
Coupled with lack of foreign direct investment and tight liquidity, the economic situation was deteriorating as evidenced by slumping industry capacity utilisation, company closures and retrenchments, he said.
If government and other stakeholders take the right approach, the economy has great potential, Nyarota added.
“The other route is that we take corrective action. Yes we have (the government’s five-year economic blue print) ZimAsset but everyone has to come together to make it work. We have to look at the actual causes of the decline,” he said.
Nyarota said addressing structural bottlenecks which include deteriorating infrastructure would benefit the economy.
“Once that is done, any economic blueprint can take off easily,” he said.
COMMENTS
‘ we should look at the actual courses of the decline’, Its ZANU and its band of geriatric s which is the problem. It’s not rocket science. And this is some leader in industry. No wonder we are where we are ,led by fools.
ZANU must go.
Test your own medicine ZANU PF people
This is a joke these clowns could not run a bath let alone an economy. The only way to attract foreign investment is for them to all resign and for a new government to be installed. As that is not going to happen we must expect the worst.
None of them have any idea of what to do.
The perceptive revenger avenger predicted this fiasco two years ago. What’s new ?
We will work with them to avoid this economic decline. Only a series of the right policy mix and it is off the ground. Its hard work for everyone, but we avail ourselves to guide Zimbabwe which we know is an economic giant in waiting.
The wheel goes round. And they truly believe they were voted in by an overwhelming majority???
ZANU has no clue of course.
We also have a seriously confused bunch of people in Zim who think ZANU won the last election and that it will deliver on its promises.
They forget the history up to and including the GNU.
They don’t want to look at the mismanagement evident everywhere in crumbling roads, stuttering rail service, moribund health system, non-existent town management, etc etc!
And the big one, the massive looting thats going on.
What hope is there for our country?
I do not accept the view expressed by some people that the ZPF government hasn’tgot a clue how to turn things around. They do, but are simply unwilling to take the necessary steps. Why? because those in positions to take these steps are gaining from the situation. They ask themselves “Why kill the goose that lays the golden egg?” And to hell with the rest of the nation! We can only pray that these men and women of power have a conscience.
If that’s no clue that what they are doing is going to lead to the demise of everything and the undoing of their own ZANU hegemony, then what is?
To accord these morons any credit at all is to ride on the EU/Chatham House bridle-less horse.
Roving Ambassador , Johno – so right. All about TRUST. No one TRUSTS a govt that through its central bank engineers the capitulation of its own currency in order to enrich a powerful clique. No one TRUSTS a banking sector which rolls over and plays dead when the central bank unlawfully appropriates client funds. No one TRUSTS a govt that NIKUVS an election (where is the voters’ roll which moved my address from Avondale to Chisipite?). Even the Chinese investors pulled their funds out of Zim immediately prior to the “election”. It is all about TRUST. NO ONE TRUSTS A GOVT WHICH PROFESSES TO APPLY THE LAW EQUALLY TO ALL OF ITS CITIZENS THEN MAKES 16 CHANGES TO ITS CONSTITUTION TO (ON THE GROUNDS OF SPURIOUS “HISTORICAL “IMBALANCES”) LEGITIMISE ETHNIC CLEANSING. And now this untrustworthy “government” wants to “own” 100 % of the agric land and the mines. Goodbye collateral. Goodbye investment. RIP.