PRESIDENT Robert Mugabe’s ruling Zanu PF is yielding to mounting pressure to act on the ailing economy and is set to discuss a recovery strategy at the highest level, an official said.
With companies shutting down and workers being laid off, government is increasingly becoming desperate for solutions.
Late July, government halved its gross domestic product growth projections for 2014 from 6,1% to 3,1% on account of low business and investment confidence, liquidity challenges and declining global commodity process.
Speaking after a business dinner organised by a state owned media house for the visiting Russian Industry and Trade Denis Manturov on Monday, Zanu PF secretary for information and publicity Rugare Gumbo told businessdigest that the ruling party was concerned with the economy and had started making time at politburo, the party’s highest decision making body in between conferences, to discuss solutions to the current economic situation.
He said Finance minister Patrick Chinamasa was given time to give periodic updates on the progress of economic projects and programmes that are deemed strategic in achieving targets of the party’s economic blue print, Zimbabwe Agenda for Sustainable Socio-Economic Transformation (ZimAsset).
“We have always looked at the economy and right now emphasis is on the economy,” Gumbo said in an interview. “The politburo has always discussed economic issues but newspapers normally tend to focus on the political issues.”
Gumbo’s statements followed similar remarks by Chinamasa that the politburo was increasingly engaging on economic issues. Zimbabwe is fast running out of options to save its economy from collapse.
Currently, government faces a US$951,3 million budgetary deficit which has to be plugged through raising additional revenues to above current expenditure capacity of US$4,12 billion to year end.
Mugabe last month went on a trip to China which, according to Chinamasa, unlocked potential multibillion dollar projects through a combination of different models.
After a series of visits to unlock funding and investment from China, Chinamasa said significant progress had been made in respect of mega infrastructure projects, but securing support to the productive sector remains a big challenge.
“What we need here is foreign direct investment which grows your taxes but currently, because of sanctions, we have got a challenge which is why we can only fund whatever we are doing through loans and the European Union has promised to lift sanctions in November.
“So far in anticipation of the lifting of sanctions we are already in discussions with the EU to see what we need to do,” Chinamasa said last week.
Top local analyst Ibbo Mandaza said the move by the Zanu PF politburo to discuss economic issues was a realisation of the need for a common political stand to change the economic face of the country.
“I hope this means the politburo and central committee are supporting Chinamasa to do all that is required to turn around the economy,” said Mandaza.
He said the Zanu PF government needs to rally behind Chinamasa to fulfill the Staff Monitoring Program (SMP) with the International Monetary Fund and ensure the multiple currency regime stays.
Mandaza said debt clearance strategies must be discussed and agreed upon with a possibility of taking the Heavily Indebted Poor Countries (HIPC) status to unlock new investment opportunity.
“No one wants to invest their money in a country that has debt of US$10 billion,” he said.
Analysts say there is also need for policy consistency with scope to even repeal the Indigenisation and Empowerment Act, one of the major deterrents to foreign investment inflows, as well as the adoption of stern measures to deal with corruption and introduction of measures to speed up registration of companies.
In his mid-term fiscal review statement last week, Chinamsa emphasised the need for clarity on indigenisation, saying seemingly contradictory interpretations over policy have nurtured negative country perceptions which, in turn, are used to undermine potential investment into the country.
Chinamasa said the minister administering the Act would soon be communicating the necessary clarification by way of a notice in the Government Gazette.
Mandaza also said there was need for transparency in the extractive industry, particularly diamond revenues.
“We can’t continue having the same problems we had under (immediate former Finance Minister Tendai) Biti.
We need to know how much is coming from our diamonds and where it is going,” said Mandaza.
“Lastly, Chinamasa needs support on working out ways to mobilise resources from the Diaspora because they are a part of our community and have recently brought US$1,8 billion annually.”