Zimbabwe’s economy is expected to grow by 3.2 percent in 2015, the finance minister said Thursday, but the bulk of the new budget would have to be allocated to spending on public wages.
Patrick Chinamasa issued the projection while presenting his $4.1 billion budget to parliament and after the International Monetary Fund said earlier this month that Zimbabwe’s economy was “at a crossroads”.
He also revealed that the bulk of the budget — $3.32 billion — would go toward paying public wages.
“The economy needs substantial investments — both domestic and foreign direct investment,” Chinamasa said.
The agriculture sector has been buoyed by high tobacco output, this year at 216 million kilogrammes, up from last year’s 165 million.
Mining was expected to grow by 3.1 percent in 2015, driven mainly by nickel, gold, chrome and coal, Chinamasa said.
Zimbabwe, led by President Robert Mugabe since independence from Britain in 1980, has been seeking to climb back on its feet after a decade-long downturn which saw runaway annual inflation peaking at 231 million percent.
While appealing for foreign direct investment, Chinamasa said 4,610 companies had shut down in the past three years, resulting in over 55,000 job losses.
“The economy continues to be dragged down by liquidity shortages, antiquated plant and machinery, cheap imports and high cost of production,” he said.
This month the International Monetary Fund said the economy was “at a crossroads”, adding that the country could not get fresh financial aid until it services old debts.
Harare is battling to service a $8.3 billion domestic and foreign debt.
The IMF had forecast 6.4 percent economic growth this year but later revised the figure downwards to 3.1 percent, citing depressed mineral output.
Investors have been scared off by the country’s indigenization laws, which require locals hold majority stakes in all firms. AFP
