afrol News, 23 March - Zimbabwe's Finance Minister Tendai Biti is getting international recognition for having been able to turn around the disastrous collapse of the country's economy. Tough reforms are already giving results, a new analysis reveals.
Minister Biti, representing the "opposition" Movement for Democratic Change (MDC) in the Harare unity government, was today given thumbs up by a visiting delegation from the International Monetary Fund (IMF). The IMF mission was in Zimbabwe to analyse recent economic trends.
IMF mission leader Vitaliy Kramarenko in a statement could not conceal his being impressed by the changes in economic management in Zimbabwe. "In 2009, following a decade of economic decline and hyperinflation during 2007–08, policies improved significantly," he noted.
Price stability had been restored, financial intermediation had restarted, and fiscal discipline had been imposed by Minister Biti, who is also the MDC party Secretary General.
"Budget revenue increased significantly, which helped finance improved delivery of public services, while the fiscal position was broadly balanced. Price and exchange system liberalisation improved allocation of resources and availability of goods in the domestic markets," Mr Kramarenko told his Harare host.
Concluding this summary of Zimbabwe's economic reforms in 2009, the IMF analyst said all these positive steps had already "supported a nascent economic recovery."
Of course, all was not well, despite Zimbabwe's economy now ein led into the right direction. "The economic recovery remains fragile and domestic and external imbalances are building up. Therefore, significant policy challenges need to be addressed without delay," Mr Kramarenko warned.
"Zimbabwe remains heavily dependent on humanitarian assistance to meet basic needs of its population," he added. "Continuing efforts to strengthen relations with the international community and attracting increased donor assistance, in particular in the areas of health, education, and critical infrastructure, would help improve the living conditions of ordinary Zimbabweans."
The IMF has been among the first to start assisting Zimbabwe to turn its economy towards new growth while donors mostly still are waiting for true democracy reforms. In addition to technical assistance and policy advices, the Fund has contributed with real money to fund reforms.
Earlier this month, Minister Biti was able to allocate the first major loan received from the Fund. Some US$ 100 million were spent on urgent infrastructure repairs and developments. This included rehabilitation of power plants, roads, bridges, the Harare airport, rail, water and sanitation, housing and telecommunications.
Zimbabwe's economic growth has been negative during most of the past decade, shrinking at an annual rate of around 5 to 7 percent. The IMF has not produced an economic growth forecast for Zimbabwe yet, but foreign business consultancy companies expect quick growth in Zimbabwe already in 2010. "Companies & Markets" recently however downgraded its 2010 forecast for Zimbabwe to an expected GDP growth of 10.9 percent - down from an earlier forecast of 15.2 percent - due to slow gains on the political scene.
And it is the political uncertainty that keeps Zimbabwe's economy from truly recovering. As there is no trust in President Robert Mugabe and his willingness to implement democratic reforms, both donors and business investors still do not want to commit significant funds to the country.
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