IMF doubts sustainability of agro-based growth

IMF doubts sustainability of agro-based growth
Finance Minister and Economic Patrick Chinamasa

Finance Minister and Economic Patrick Chinamasa

By Farai Mabeza

ZIMBABWE, which has revised upwards its growth projections, could face difficulties sustaining the economic growth trajectory if it does not implement structural economic reforms, experts have warned.
Finance and Economic Development Minister, Patrick Chinamasa, revised his 2017 gross domestic product growth rate to 3,7 percent from 1,7 percent on the back of an expected bumper agricultural harvest this season.
But International Monetary Fund’s resident representative, Christian Beddies, cast doubt on the sustainability of this growth.
“My question would be: Is that sustainable and what do we need to do in order to maintain the growth momentum? Basically, Zimbabwe needs two things – regain macroeconomic stability, do the structural reforms that are needed to create a playing field where everyone can operate while at the same time acknowledging that over the medium term the country can’t live alone. Re-engagement is important,” Beddies said.
Economist, Moses Chundu, said due to over-reliance on agriculture, Zimbabwe was susceptible to droughts and weather variations which were likely to affect agric-dependent gowth.
“If you want to grow further you need more agriculture output than you had this year. The only way we can do that is if we have the same weather conditions that we had this year,” said Chundu.
“So if its growth that is being pushed by one sector, we don’t look forward to its sustainability. You want to be able to increase your productivity or your production or else you need to prop other sectors so that they complement each other because growth that is driven by one sector is very dangerous because it’s very volatile,” Chundu said.
Zimbabwe National Chamber of Commerce chief executive officer, Chris Mugaga, said the country should work on attracting investors to achieve sustainable growth.
“Reducing the high risk premium which is associated with investing in Zimbabwe is vital to accelerating economic growth,” Mugaga said.
A Washington-based IMF official, William Murray, said the main finding of Article IV consultations concluded last month on Zimbabwe was that growth in 2017 would be boosted by the bumper harvest due to exceptional rainfall.
“The challenge really is to sustain growth in Zimbabwe. This will require timely action to reduce the (budget) deficit to a sustainable level and reforms to attract investment. Excessive government spending, if continued, could exacerbate a cash scarcity, further jeopardise the external and financial sectors, and ultimately fuel inflation in Zimbabwe,” Murray said.

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