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World Bank warns Zim

FILE PHOTO - Zimbabwean Finance Minister Mthuli Ncube looks on before the swearing in of new cabinet ministers at State House in Harare, Zimbabwe, September 10, 2018. REUTERS/Philimon Bulawayo

World Bank warns Zim

Zimbabwe should  address its severe macro-economic  problem, including  price and exchange rate volatility  and public debt  arrears, among many other problems, to support future  economic growth, the World Bank (WB) warned yesterday.

According to the Bretton Woods Institution, Zimbabwe’s economy will expand by 3.5% in 2024 as opposed to 4.5% in 2023 as a result of lower commodity prices and less productive agriculture after an El Nino-induced drought.

These elements could lead to financial strain.

WB Country Manager Eneida Fernandes told the delegates at the   fourth Zimbabwe Economic Update  (ZEU) launched in Harare yesterday that Zimbabwe  needs continued reforms to boost  economic growth.

“To sustain  the economic growth, Zimbabwe  must continue  tackling its macro-economic  challenges. Addressing price and exchange rate  volatility and public debt arrears will support economic growth and job creation. This will help the country  address the poverty, vulnerability and food insecure rates, which remain high,” Fernandes said.

Zimbabwe’s  total  Public and Publicly Guaranteed  (PPG) debt amounted to US$17.7bn, as at end of September 2023, of which external debt amounted to US$12.7bn  and domestic debt of US$5bn.

She said Zimbabwe  needs  to clear its debt arrears to access fresh credit lines and accelerate growth to achieve  its upper middle income economy.

Finance, Economic Development and Investment Promotion Minister Professor Mthuli Ncube  concurred.

“We are happy that the World Bank recognises the government’s efforts to restore macroeconomic stability since June 2023. Let me reiterate that as a government we are committed to introduce new measures  to guarantee exchange  rate  and inflation stability. Stability is also core to the fiscal thrust of the 2024 National Budget  that is now before Parliament,” Professor  Ncube said.

Economist  Joseph Mverecha said Treasury should come up with more measures to complement  the existing ones instituted in May and June to achieve  inflation and exchange rate  stability.

“From a policy point of view,  there is a need to interrogate the monetary function in our country given the structured  context of unique Zimbabwean situation of the multi-currency system as we are again witnessing the drift in the parallel market  since  end of July where we saw the official market depreciating 31% as of Tuesday this week and at the same period we have seen an even bigger drift in the parallel market of around 75%.

“This means we are where we were in April and what that means is there are some implications for price stability and this  is a key issue in achieving economic growth.

“The issue of exchange rate and price stability needs a lot of attention as to what we need to do to achieve the desired growth,”Mverecha said.

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