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Zimbabwean finance minister Patrick Chinamasa will present the 2016 national budget on Nov. 26 outlining government’s proposed revenues and expenditure for the financial year.

The modest growth, if achieved, will be a welcome relief for the stuttering economy whose growth for 2015 was initially slated at 3.2 percent but was whittled down to 1.5 percent due to low foreign direct investment and poor performance in key economic sectors.

The pre-budget strategy paper reaffirms that growth for 2015 will be subdued, explaining that while sectors such as tourism, construction and communication will register modest growth, overall economic performance for the year will be dragged down by poor agriculture and mining performance.

“The initial growth target of 3.2 percent will be compromised primarily by the impact of drought.

A combination of late rains and its uneven distribution not only resulted in about 20 percent of the area under cropping being written-off, but also adversely affected the quality of grains and cash crops,” the pre-budget strategy paper says.

Agriculture is the mainstay of Zimbabwe’s economy contributing about 20 percent to Gross Domestic Product followed by mining which contributes around 16 percent.

To spur growth in 2016, the Zimbabwe government would engage stakeholders to clarify and resolve misconstructions on the indigenization law, the pre-budget strategy paper says.

The indigenization law requires foreigners to cede majority shareholding to locals and the law has blamed in some quarters for stifling FDI.

The strategy paper says policy clarity and consistency are integral in promoting FDI, which it expects to rise to 614 million U.S. dollars from 591 million dollars in 2015 benefiting from government’s policy clarifications and re-engagement with creditors.

Bemoaning that FDI inflows remain far too low relative to the investment requirements for the country, the pre-budget strategy paper says more attention will be paid to addressing the ease and cost of doing business, concluding outstanding BIPPAs as well as removing infrastructure bottlenecks, among other priorities.

To boost agriculture and food security, the 2015/2016 agricultural program targets 2.1 million hectares for grains, 1.7 million ha for maize and about 485, 000 ha for small grains.

This requires estimated total financing of about 1.7 billion U.S. dollars, of which 1.3 billion is for crops.
The strategy paper notes that agriculture is key to alleviating poverty and supporting other sectors in Zimbabwe as it provides employment and incomes to more than 70 percent of the population.

The Government says its intervention will primarily focus on supporting about 300,000 vulnerable households through an inputs scheme.

Government says it will also expedite clearance of arrears to both inputs suppliers and farmers.

In the wake of normal to below normal rainfall forecast for the country in the 2015/16 agricultural season, planting of early maturity varieties and ensuring early accessibility to inputs will be important, the strategy paper says.

Furthermore, structured investment in rehabilitation and development of irrigation systems should be prioritized.

Despite the prolonged impact of declining international prices, mining continues to hold much potential and in 2015, the sector exhibited moderate growth primarily driven by increased gold, nickel, platinum and coal output.

Due to declining power generation owing to declining water levels at Kariba Dam, total power supply will continue to be outstripped by demand, compelling institution of demand management measures which will include use of efficient lighting systems, adoption of solar energy, as well as embracing of other energy saving equipment and habits, the pre-budget strategy paper says. Enditem

Source: Xinhua


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