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Zimbabwe Economy Facing Difficulties

Zimbabwe Economy Facing DifficultiesZimbabwe Economy Facing Difficulties

Low commodity prices coupled with tight liquidity conditions and successive droughts effectively slowed down Zimbabwe’s economic growth from 1.1% in 2015 to 0.7% in 2016, International Monetary Fund representative has said, AllAfrica reported. Writing in the IMF country report, country executive director, Maxwell Mkwezalamba said severe drought and slow reform momentum have resulted in high expenditure levels since 2015, hence affecting Zimbabwe’s economic performance. He added that limited access to foreign inflows has worsened fiscal imbalances, an unsustainable situation that has forced government to finance the difference by increasing domestic borrowing. IMF noted that extra-budgetary expenditures related to grain imports necessitated by drought conditions as well as elevated employment costs, shored up government expenditures in 2015 and 2016. However, Mkwezalamba noted that partial recovery in commodity prices is expected to enhance viability of mining operations, and culminate in improved output. He also said inflation turned positive in 2017 following a prolonged episode of negative inflation. “Renewed inflationary pressures emerged, stemming from premiums in the informal foreign exchange market, consequently, year on year inflation rose from -0.7% in January to 0.75% in May 2017.

 

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