- In a recent interview with a local radio broadcaster, Minister Ncube maintains that 2020 GDP will grow by 3%
- GDP contracted between -6.5% and -11% in 2019
- In his 2020 National Budget, Minister Ncube says economic growth will be anchored on expected better rainfall season and increased agricultural production
- Drought, inflation and power shortages threatening economic growth
When Professor Mthuli Ncube was appointed Minister of Finance in 2018, the move generated interest and widely seen as a positive step at least by those who share the view that technocrats can run government affairs better than bureaucrats. A look at Zimbabwe’s current economic affairs, one has to rethink the validity of that view point.
A holder of a PhD in Mathematical Finance from Cambridge University and regarded as a distinguished practitioner in the field of finance, economics, investment and public policy, Ncube’s appointment as the Minister of Finance came at a time when the new dispensation was gearing towards the rebuilding and transformation of the ailing economy to become an “Upper Middle Income Economy by 2030.”
With that timing, the post comes with greater responsibility, one which Ncube is struggling to keep in interesting fashion. For the sake of clarification, I am of the school of thought that Zimbabwe’s problems are structural, thus cannot be entirely blamed on one individual. I believe structural reforms are prerequisite to a genuine economic recovery path, but even so, that does not exonerate the women and men in positions of power from their show of ignorance and naivety in addressing issues affecting the country.
In what appears to be one of the biggest jokes of 2019, Professor Ncube earlier that year said prices of basic goods and commodities will fall by April. That did not materialise and the year closed with annual inflation well above 400%. Since assuming the role of heading the country’s Treasury Department, the Minister and his team have during this time failed to meet set targets, and GDP is one of the key issues.
Even as the economy was reeling from the effects of drought and a devastating Cyclone Idai coupled with persisting power cuts and foreign exchange shortages, it took the Treasury Chief until August 2019 to admit that the country was in a recession with GDP set to contract between -6.5% to -11% by year end. In his 2019 National Budget, Minister Ncube gave an initial 3.1% GDP growth projection.
It is equally surprising that even when global institutions such as the World Bank and the International Monetary Fund were quick to revise their initial 2019 GDP projections for Zimbabwe from positive to negative, the government, in particular the Treasury Chief showed no interest to study the contrary facts with the emergency it possibly required.
Come 2020, the Finance Minister maintains that the country’s economy would grow by 3% this year even as it faces the threat of poor rainfall and the persisting power cuts which are crippling mines and industry productivity. Contrary, the Economist Intelligence Unit (EIU) projects Zimbabwe’s GDP to contract by 13% in 2020.
Analysts at financial research firm Equity Axis, gave a bleak outlook in a recently published inflation report. “We are therefore of the view that 2020 presents more fiscus hazards which could potentially further destabilise the economy pushing it into a worse off disequilibrium,” the report reads in part.
In that report, they contradict with Ncube’s 2020 budget of $64 billion, advising that the growth will not be achieved without a spike in inflation, which would naturally spur revenue. The argument compares 2019 average tax revenue of ZWL$2.1 billion (third quarter 2019) against an unlikely average tax revenue of about ZWL$5 billion to support the ZWL$64 billion 2020 budget.
Economic projections especially from the Ministry of Finance are highly susceptible to political influence in most cases where the ruling party wants to paint a bright picture of the country’s future prospects, but even so, the Minister’s projections outlined in his 2020 National Budget trigger a sense of ignorance and naivety.
He said growth will be primarily premised on the following key assumptions ,expected better rainfall season , better planning for increased agricultural production, improved macroeconomic stability, extension of supportive tax and non-tax incentives to stimulate domestic production and advancing implementation of the ongoing ease of doing business reforms.
These projections are accompanied by no substance and refuted by empirically proven facts such as drought, inflation, power shortages which all militate to show an even bleaker 2020 outlook.
Equity Axis News
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