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Zimbabwe economy expected to grow by 4.5 per cent in 2018

HARARE Zimbabwe (Xinhua) -- Finance Minister Patrick Chinamasa HAS said Zimbabwe’s economy is projected to grow by 4.5 percent in 2018, up from 3.7 percent in 2017 driven by strong performance in agriculture, mining and energy.

Presenting the first post-Mugabe national budget in Parliament, Chinamasa announced a 5.1 billion U.S. dollars national budget for 2018, up from 4 billion dollars in 2017.

He said total expenditure for 2018 was projected at 5.8 billion dollars, giving a budget deficit of 672.3 million dollars which constitutes 3.5 percent of Gross Domestic Product.

This is markedly down from the 2017 budget deficit of 1.7 billion dollars, constituting 9.4 percent of GDP.

Chinamasa said the budget, which proposes massive job cuts in the public sector and major economic reforms, will usher in a new economic order that propels growth and development.

The minister said overally, measures contained in the 2018 budget were aimed at restoring market and investor confidence, ensuring discipline in management of public finances and ensuring policy consistency, clarity, credibility and predictability.

The measures were also aimed at addressing current cash and foreign currency shortages in the economy, he said.

Among the major reforms proposed in the budget to attract foreign direct investment is the amendment of the indigenization and economic empowerment law promulgated during former President Robert Mugabe’s government.

The finance minister said the controversial law will be reviewed such that the 51-49 percent threshold will only apply to two minerals - platinum and diamond -while the rest of the minerals will be exempted from the law.

This means that foreign investors in the platinum and diamond mining sector will be required to cede 51 percent shareholding to locals.

"The 51-49 (percent) threshold will not apply to the rest of the extractive sector nor will it apply to other sectors of the economy which will be open to any investor regardless of nationality," Chinamasa said.

There will be sectors reserved for locals and foreigners will only participate in these sectors through special dispensation granted by government, the minister said.

The review of the law is set to ignite foreign investor confidence in the economy and boost foreign investment inflows that are critically needed to jump start the economy and arrest massive unemployment in the country.

Chinamasa’s budget made bold statements about government’s unequivocal desire to cut government expenditure and address the challenge of unsustainable budget deficit which he said is affecting macro-economic stability.

He said government intends to cut its wage bill from the current 86 percent of total revenue to 70 percent in 2018 through retiring civil servants above the age of 65 years, laying off 3,800 redundant youth officers and maintaining a freeze on recruitment of non-critical staff, among other measures.

Government will also downsize its 46 diplomatic missions abroad to contain expenditure as it was currently struggling to clear arrears amounting to 17.3 million dollars, the minister said.

The minister said government will close non-strategic technically insolvent state-owned firms and commercialize strategic ones as it moves to reform the enterprises that have been a drain on the fiscus for a long time.

"It is now the time for action under the new economic order for implementation of the long overdue parastatal and enterprise reforms," Chinamasa said.

He said the government will strengthen agencies mandated with fighting corruption and make the fines more prohibitive as part of measures to fight the scourge.

Zimbabwe, the minister said, will intensify and accelerate its re-engagement with the United Kingdom, United States and the European Union to open doors for international cooperation.

In addition, government will double efforts to re-engage with the World Bank, International Monetary Fund, the European Investment Bank and all bilateral creditors to unlock funding for economic development, Chinamasa said.

"The country has for a long time experienced low productivity. Government will seek to attract both domestic and international investment through implementing investor friendly policies," he said.

The minister allocated 132.2 million for the holding of elections in 2018 which he said must be credible "for restoration of confidence in our economy".

As part of measures to boost productivity, the minister proposed a raft of tax incentives for agriculture, industry and tourism sectors.

He also proposed an export tax of five percent on gross value of exported lithium and further deferred tax on unrefined platinum exports to 2019.

He said inflation was expected to end 2017 at around 3 percent. He promised that government would pay its workers their 2017 bonuses but would stagger them due to current liquidity challenges in the economy.


Zimbabwe not yet ready for its own currency: finance minister

HARARE Zimbabwe (Xinhua) -- Zimbabwean Finance Minister Patrick Chinamasa said Friday the country is still far from having its own currency.

Zimbabwe adopted use of multiple currencies in 2009 after its currency had been rendered worthless by a decade of hyperinflation.

The U.S. dollar has been the main transacting and trading currency but there has been an acute shortage of the greenback, resulting in authorities introducing local bond notes in November last year to ease the bank note shortages.

However, the supply of the bond notes has remained limited and the country continues to face cash and liquidity challenges.

Speaking at a post-budget meeting, Chinamasa said Zimbabwe will only be able to re-introduce its own currency after addressing key macro-economic fundamentals that include having sufficient reserves for imports.

"We are not yet ready for our won currency until we have done certain things which include addressing the budget deficit, addressing the issue about import cover.

"If I got six months cover, that is good enough but at the moment its 0.7 months cover.

"This is not good enough.

"We need to address the issue of trade balance especially where our imports are not adding value to the economy," the minister said.

The minister said one feasible way of building up reserves to support national currency is to resuscitate a few idle gold mines through joint ventures so that they can produce gold solely to build up reserves.

"What I have in mind is that there are a lot of gold mines sitting idle for lack of capitalization.

"We can take one, two or three of those mines to produce gold not for disposal but to build the serves so that we can build an anchor to any future currency that we may want to introduce," Chinamasa said.

China offers funding for Zimbabwe infrastructure development

HARARE Zimbabwe (Xinhua) -- China on Wednesday agreed to provide Zimbabwe with a funding of about 213 million U.S. dollars for infrastructure development projects.

The funding includes those for the expansion and upgrading of the country’s flagship airport, the Harare Robert Gabriel Mugabe International Airport, construction of a new Zimbabwe parliament building and the second phase of the high performance computing center, the third fastest computing center in Africa.

The financing agreements are the first to be signed by Zimbabwean President Emmersen Mnangagwa’s new administration and are a fulfillment of some of the projects agreed between Zimbabwe and China during Chinese President Xi Jinping’s visit in 2015.

Speaking at the signing ceremony, Chinese ambassador to Zimbabwe Huang Ping said China will continue to support the Zimbabwean government in its economic revival and social development efforts.

"The agreements we have signed today are just a testimony of our efforts and our friendship that withstands the test of time.

"As Zimbabwe’s all-weather friend, the Chinese government has been committed to assisting our good friend and brother in its development path through thick and thin ever since Zimbabwe’s liberation struggle," Huang said.

He said China was pleased to be lending financial support to Zimbabwe at "this new juncture of Zimbabwe’s social and economic development."

Zimbabwean finance minister Patrick Chinamasa said China’s financial support was testimony to the lasting friendship that exists between Zimbabwe and China.

"I want to take this opportunity to extend our gratitude and appreciation to China for the support that they have availed," Chinamasa said.

He said the infrastructure development projects were significant in that they will help create jobs for local people and boost business for local suppliers of construction materials.

He said upgrading of the Robert Gabriel Mugabe International Airport will entail expansion of the terminal building, rehabilitation of the runway, installation of the communication system, refurbishment of the fire station and new satellite station, among other works.

Financing of the project will be administered by China Export-Import Bank.

The expansion works will more than double the airport’s handling capacity from the current 2.5 million passengers per year to 6 million.

Zimbabwe renames army headquarters after liberation war icon

HARARE Zimbabwe (Xinhua) -- The Zimbabwean government on Wednesday officially renamed the country’s army and airforce headquarters in the capital Harare after one of the country’s liberation war icons as part of a process to rid the country of a colonial mentality.

President Emmerson Mnangagwa officiated at the event where King George the Sixth army barracks was renamed after Josiah Magama Tongogara, a military strategist who directed the prosecution of Zimbabwe’s liberation war that culminated in the independence from Britain in 1980.

Albert Fredericks Arthur George VI was king of Britain between 1936 and 1952. The late General Josiah Magama Tongogara was born in 1940 and died on the eve of Zimbabwe’s independence in 1979.

Mnangagwa said he will preside over the renaming of three other military cantonments in the country as the nation takes steps to rewrite and preserve its liberation war history.

The renaming of all the country’s barracks after the country’s liberation war heroes comes after government recently gazetted the name changes.

Mnangagwa said the process of renaming the military barracks from colonial names was critical to help Zimbabwe "exorcise" the ghost of colonialism and shed colonial mentality.

The country’s military barracks had largely maintained colonial names 37 years after independence.

"This process (of renaming) has set in motion our longstanding desire to re-write our own history and in the process promoting our values as Zimbabweans," Mnangagwa said.

"By so doing, we rid ourselves of the colonial mentality which regards all that is associated with Europe and the West with high esteem while placing a low opinion on our own value systems as Africans."



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