THE World Bank has said Zimbabwe’s economic decline is untoward for a country that is not at war.
g Schafer, Zimbabwe World Bank’s country director, on Wednesday said for the six-year economic meltdown to be reversed, serious economic restructuring like the one which helped the former Soviet Union states would be required.
According to Schafer, the crisis facing the country is largely because of poor government policies.”I can’t think of a country that has experienced such a decline in peace time,” he said.
“The major reasons for (Zimbabwe’s) decline are the breakdown of agricultural productivity and distortion of economic policies,” he said.
The 2000 ill-planned land reform programme, which was often violent, led to seizures and disruptions on the farms, which resulted in maize production declining by three quarters.
The reform impacted on Zimbabwe’s exports and food security.
In addition to the frontal attacks on agricultural production, the rest of the economy suffered from the undermining of property rights and poor macroeconomic management.
The government has run huge budget deficits of up to 22% of gross domestic product since 2000, and has printed money to cover triple-digit hyperinflation. Although the government has said that the economy is on a recovery path, the country has been given the dubious status of having the fastest shrinking economy in Africa.
Due to the crisis, the central bank has now been forced to revise its initial economic growth figures from 3% to 2%.
The central bank has also revised its initial annual inflation rate target from 20-35% to between 50-80% although analysts say the target would be missed.
The World Bank has produced a report on Zimbabwe’s agricultural sector, which said that government’s fast track land reforms had redistributed 80% of farmland and improved racial distribution of agricul-tural property but had worsened poverty.
The report said the land reform programme coincides with a deepening political and economic crisis, which saw GDP shrinking by more than 20% since 2000, while agriculture registered a cumulative decline of 26%.
The programme’s impact on agriculture had the effect of displacing 30% of farm workers who are now destitute and living as squatters.The report, said 70% of Zimbabwe’s 11,6 million people were living below the poverty datum line as per capita gross domestic product had plummeted 30% since 1999.
Schafer said restoring agricultural productivity would be a first step to helping Zimbabwe arrest its economic free fall.
“It wouldn’t change things overnight but it would stop the economic hemorrhage and help the country get back on an upward path,” he added.