World Economy

Zimbabwe Moving Slowly Toward Open Economy

The 51-49% threshold will only apply to two  minerals—platinum and diamond.The 51-49% threshold will only apply to two  minerals—platinum and diamond.

In the budget presented after the end of Robert Mugabe’s era of 37 years of ruling the country, Zimbabwe has taken a few positive steps in order to liberate the economy and make it more open.

Finance Minister Patrick Chinamasa has presented a budget having a few very crucial measures and changes making the economy more tempting an inviting for foreign investors. These measures also include curbing the laws which require businesses to be 51% owned by domestic businesses or local people, Reuters reported.

He also said that the country is considering the privatization of some of the state owned firms too. Apart from opening the doors of the economy to changes, the budget paid attention to restricting unnecessary costs and hence the decision of the closure of some diplomatic missions.

Plus all civil servants above the age of 65 years would have to get retired as at present 90% of the government expenditure is spent on the salary of civil servants.

Presenting the national budget in parliament, Chinamasa announced a $5.1 billion budget for 2018, up from $4 billion in 2017. He said total expenditure for 2018 was projected at $5.8 billion, giving a budget deficit of $672.3 million which constitutes 3.5% of gross domestic product. This is markedly down from the 2017 budget deficit of $1.7 billion, constituting 9.4% of GDP.

The minister said measures contained in the 2018 budget were aimed at restoring market and investor confidence, ensuring discipline in management of public finances and ensuring policy consistency, clarity, credibility and predictability.

The measures were also aimed at addressing current cash and foreign currency shortages in the economy, Xinhua quoted him as saying.

Among the major reforms proposed in the budget to attract foreign direct investment is the amendment of the indigenization and economic empowerment law promulgated during Mugabe’s government.

The finance minister said the controversial law will be reviewed such that the 51-49% threshold will only apply to two minerals—platinum and diamond—while the rest of the minerals will be exempted from the law.

“The 51-49 threshold will not apply to the rest of the extractive sector nor will it apply to other sectors of the economy which will be open to any investor regardless of nationality,” Chinamasa said.

There will be sectors reserved for locals and foreigners will only participate in these sectors through special dispensation granted by government, the minister said.

Add new comment

Read our comment policy before posting your viewpoints