Govt borrowing up 29 pct to $549m

via Govt borrowing up 29 pct to $549m – New Zimbabwe 23/04/2015

GOVERNMENT’S domestic borrowing rose by 28.76 percent to $549.18 million in February from $426.50 million in the same period a year ago, the central bank said on Thursday.

The country relies on taxes to fund its national budget after institutions like the International Monetary Fund (IMF) and Western donors cut lending in 1999 over policy differences with President Robert Mugabe.

Mugabe’s government is struggling with falling tax revenues as companies shut down due to competition from cheaper imports, high electricity charges and lack of foreign investment.

The Reserve Bank of Zimbabwe (RBZ) said in its February report that the debt rose in part after it issued $200 million in Treasury bills to some creditors.

The IMF repeated in its latest report this week that Zimbabwe’s economic prospects for 2015 remained poor, predicting weaker growth compared to last year’s 3.1 percent expansion.

Risks to Zimbabwe’s growth included a decline in global commodity prices and difficulties by the government to implement policies under an ongoing programme with the fund, the IMF said.

Last week Mugabe reinstated annual bonuses for public workers, days after his finance minister suspended the payments citing falling revenues and the need to cut a wage bill that takes 82 percent of government’s total income.

Cutting the salary bill is one of the measures the government has agreed to under an IMF reform programme.