The southern African country’s economy, battered by
hyperinflation which reached 500 billion percent in 2008, grew 5.7 percent in
2009 — the first time in a decade — under a power-sharing government set up by
bitter foes President Robert Mugabe and Prime Minister Morgan Tsvangirai.
An IMF team that visited between Oct 25 and Nov 3 for
routine discussions with government and the private sector said Zimbabwe would
have a budget surplus this year, among other signs of improved economic
conditions.
“Supported by renewed efforts to strengthen policies and
favorable shocks, the Zimbabwe economy is completing its second year of buoyant
economic growth after a decade of economic decline,” the IMF said.
“The budget is projected to generate a cash surplus in 2010,
governance at the Reserve Bank of Zimbabwe is improving, and the government is
working toward strengthening the business climate.” The IMF has projected the
economy to grow by 2.2 percent in 2010, while Finance Minister Tendai Biti says
it is on course for 8.1 percent growth this year and 10 percent in 2011.
The IMF said there should be more funding for infrastructure
and social needs in the 2011 budget and recommended that the government cap
cash budget expenditure at $2.5 billion.
Higher gold and platinum prices have boosted exports and
government revenues in 2010, while favorable weather conditions contributed to
higher agricultural output.
Analysts have said Zimbabwe’s shaky coalition government,
which has squabbled over key government appointments and the pace of reforms,
was holding back the pace of recovery.
“Political stability is also key to consolidating gains in
macroeconomic performance,” the IMF said, adding that more reforms were needed
to realize potential.
“Priority areas include reducing labor market rigidities,
establishing security of land tenure, clarifying ownership requirements under
the indigenization legislation, and addressing concerns about governance in the
diamond sector.” The Fund also said strict regulation had seen risks in the
banking system easing since the beginning of 2010. It added that aid to
Zimbabwe, which owes multilateral finance institutions nearly $7 billion, would
remain limited to technical assistance.
