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Budget offers little hope for economic recovery’


ZIMBABWE Finance minister Herbert Murerwa unveiled a national budget for 2004 yesterday which analysts said offered little hope of quick recovery for an economy facing its worst crisis in history.

Budget highlights:

* Economy expected to shrink by 8,5% in 2004, slowing down from a revised contraction of 13,2% in gross domestic product (GDP) for 2003.

* Inflation, which soared to 526% in October from 208% in January, was described as the country’s “number one enemy”. Murerwa said the inflation rate was expected to shoot to 700% in the first quarter of 2004, before starting to subside. He gave no further estimates.

* There were no firm proposals on how the government intends to tackle chronic foreign currency, fuel and short-term food shortages.

* Instead Murerwa said the Reserve Bank of Zimbabwe would announce a new monetary policy in mid-December detailing, among others, proposals on foreign exchange management, interest rates and the management of money supply to help slow down inflation.

* Murerwa said the government would introduce value-added tax from January 1, and estimated the country’s budget deficit would remain unchanged at around 7,5% of GDP.

* Murerwa announced several but mostly small tax concessions for workers and pensioners. But he maintained the corporate tax rate at 30%.

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