The International Monetary Fund yesterday raised its 2018 Zimbabwe economic growth forecast to 3,6 percent from 2,4 percent it projected in April this year.
This comes after the Government also revived upwards growth projection for this year, saying the economy is showing signs of recovery despite a number of challenges and risks.
The challenges relate to foreign currency and cash shortages, unsustainable high budget and current account deficits, emerging inflation pressures, slow moving re-engagement process, infrastructure deficiencies and weak social service delivery.
The Government estimates the economy will expand 6,3 percent against the initial projection of 4,5 percent.
“Although the IMF forecast is lower than Government projections, it has observed that there is something happening,” said an analyst with a local research firm.
Both projections by the Government and the International Monetary Fund are above 3,1 percent, which sub-Saharan Africa is expected to go by this year.
The IMF has also projected the economy will grow at an average of 4,7 percent between next year and 2023. However, the Government is expecting higher growth rates as it targets to achieve upper middle income status by 2030.
Finance and Economic Development Minister Professor Mthuli Ncube said last week the macro-economic and fiscal stabilisation become “critical and urgent” and should invariably target the fiscal deficit.
“These challenges call for urgent reforms,” he said.
“It cannot be business as usual. Bold decisions need to be taken on the reforms front in order to stimulate growth and sustainable development,” said Prof Ncube.
The minister is attending the annual meetings of the IMF and World Bank in Balo, Indonesia where Zimbabwe’s arrears clearance strategy will be discussed.
“I am now off to Bali for the annual IMF/World Bank meeting to continue dialogue with our international partners, focusing on accelerating Zimbabwe arrears with multi-lateral lenders and unlocking new capital,” he said in a tweet yesterday.
Zimbabwe owes the World Bank and the African Development Bank about $1,8 billion.
Clearing the arrears will unlock new funding for the country, cut nearly two decades ago as Harare defaulted. Zimbabwe is in need of fresh funding to reboot the economy which suffered successive years of poor administration under the old dispensation.