Zim posts higher than expected economic growth: IMF

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Harare (New Ziana) – Sound management of the Covid-19 pandemic, strong agricultural and mining sector growth saw Zimbabwe’s economy grow by 6.3 percent in 2021, recovering from a cumulative slump of 11.7 percent between 2019 and 2020, the International Monetary Fund (IMF) said on Thursday.

The latest projection is higher than the 5.1 percent that the IMF had predicted last year, but is lower than the government’s 7.8 percent projection.

In its latest Article IV consultation with Zimbabwe, the IMF said the country had registered strong economic recovery.

“Real GDP rose by 6.3 percent in 2021 reflecting a bumper maize harvest, strong pickup in mining, and buoyant construction. A tighter policy stance since mid-2020 (relative to 2019) has contributed to lowering inflation to 60.7 percent (year on year) at end-2021.

“Fiscal policy was tightened in 2020 21, reflecting increased revenues and lowered spending. The current account balance turned into a surplus during 2019-21, reflecting favorable metal prices, lower imports, and a surge in remittances,” it said.

“The authorities’ swift response to the pandemic, including through containment measures and economic and social support, helped contain its adverse impact.”

The IMF becomes the latest global lender to commend Zimbabwe’s Covid-19 response, after the World Bank recently extended a similar pat on the back, after being charmed by the country’s well-planned and implemented Covid-19 vaccination programme.

Zimbabwe has procured vaccines worth over US$140 million, and already boasts of a number of towns and cities that have achieved herd immunity, notable achievements for a country reeling under economic sanctions, and also one that was excluded from global Covid-19 funding support.

Zimbabwe, which is in arrears to the World Bank, and other International Financial Institutions, could not access regular financing from these like other nations, and had to make do with small grants from their trust funds.

Going forward, the IMF expects the recovery that resumed in 2021 to continue, albeit at a slower pace.

The IMF projects growth of about 3.5 percent this year, while Zimbabwean authorities are expecting higher growth of 5.5 percent, driven by higher mineral commodity prices and continued good management of the COVID-19 pandemic.

The global lender urged caution on government spending.

“On the spending side, accelerating reforms of state-owned enterprises and enhancing fiscal controls will be critical to limit fiscal risks,” the IMF said.

“The directors also emphasized the need to enhance revenue mobilization, including through broadening the tax base and improving tax administration and compliance.”
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