Government wants to maintain stable exchange rates and
increase the availability of fuel and electricity as part of efforts to achieve
3 percent economic growth this year.
Improving commodity prices for major exports, especially
the gold price which rose to US$1 545,50 a troy ounce (just under US$50 a
gramme) yesterday, are also primed to spur economic growth by boosting export
earnings.
The exchange rate has achieved a high level of stability
over the last 15 weeks since the start of October last year. While agriculture
may be affected by poor rains this season, the situation was unlikely to be
worse than last year.
Finance and Economic Development Minister Professor Mthuli
Ncube, in a wide ranging interview on Monday night, said funds have been set aside
to ensure power imports.
He said plans were in place to license more independent
power producers to generate electricity through solar and coal to end
load-shedding.
Zimbabwe has endured load-shedding since last year after
the regional drought reduced upper Zambezi flows, thus keeping water levels low
in Kariba Dam, and decades-long failure to refurbish thermal power stations,
especially the giant Hwange Thermal.
While efforts have been made to prioritise industry when
rationing electricity, manufacturers have been forced to resort to expensive
diesel and petrol generators more frequently than they desire.
Experts generally agree that improved fuel and power
supplies will ease the transition to economic growth.
Said Prof Ncube: “In terms of prospects for this year, our
expectation is that the economy will perform better than last year and we
expect growth of 3 percent in terms of GDP growth. You have seen the forecast
from the World Bank at 2,7 percent in terms of GDP growth and the IMF (International
Monetary Fund) forecast is just below 2 percent. So there is some positive
growth if one were to put all of those together, including our own 3 percent
GDP growth rate.”
He hoped Zimbabwe will not experience shocks of the
magnitude of Cyclone Idai, which devastated human lives, crops, livestock and
infrastructure in Manicaland and Masvingo provinces. This piled pressure on
Government to allocate more resources for the provision of food to affected
areas, and other parts of Zimbabwe that did not get good harvests from the
prior cropping season. We are hopeful that God will smile at us and we don’t
get another cyclone.”
Incentives such as the $500 million Venture Capital Fund
and $240 million allocated to the Industrial Development Corporation (IDC) should
be exploited by industry to drive economic growth.
Further, a fiscal incentive — Youth Employment Tax
Incentive (YETI) — has been introduced through the 2020 National Budget to
support employers who generate jobs for people under 30 years.
Prof Ncube said Treasury will work with Zimra, Ministry of
Justice, Ministry of Labour, the Employers Confederation of Zimbabwe (Emcoz)
and other relevant organisations to ensure companies benefit.
“Again talking about prospects, individual citizens will
benefit from the idea of Youth Employment Tax Incentive where we will be giving
rebate to companies that will employ additional youth below the age of 30.
“So we are certainly more optimistic this year than last
year, but we continue to watch the weather. It is a part of the story: Better
weather is what we expect,” he said.
The Government also expects the budget deficit to be within
the on-and-a-half percent that has already been projected.
“The one issue that I think we continue to watch and focus
on is currency stability.
“But I want to be clear on the urgent priorities that we
will focus on even in this broader theme of growth, productivity and so on, is
to ensure food is on the table, energy security (fuel and power) and currency
stability and macro-economy stability and then inflation,” said Prof Ncube.
More facilities, to be provided through the banking sector,
will be availed soon for industry.
Since the 2020 Budget was passed in late December,
modalities for operationalising the guarantee scheme are being worked on for
companies to borrow from banks on a Government guarantee for retooling
purposes.
Another similar facility is being crafted for the mining
sector, which will be implemented through the Minerals Marketing Corporation of
Zimbabwe (MMCZ).
In the energy sector, the Government will focus on
providing adequate letters of credit to support the importation of fuel.
Said Prof Ncube: “Letters of credit have been put in place
to cover the monthly demand of 120 million litres for both diesel and petrol.
Letters of credit have been in place and we are doing enough to make sure that
we cover everyone.”
The letters of credit will be distributed to both large and
small suppliers who are set to meet Treasury and the Reserve Bank of Zimbabwe
(RBZ) this week to iron out mechanisms for distributing them.
But Prof Ncube said since local fuel remained relatively
cheaper compared to prices in the region, there was still a gap of arbitrage,
causing more demand. This involves foreign truckers filling in Zimbabwe and
illegal exports of fuel from Zimbabwe for hard-currency sale in foreign black
markets.
Turning to electricity, Prof Ncube said focus will be on
availing funds for power imports; accelerating issuance of licences and
investing in renewable energy, mainly solar energy. Zesa will also be given
“maximum support”.
“So we have our priorities. We are also focusing on the
environment for doing business; you have seen the advert for CEO of ZIDA.
“We are making progress in that direction, setting up that
one-stop-shop. We want to keep improving our position on the ease of doing
business to make sure that we are open for business.” Herald
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