Chinamasa silent on civil servants’ bonuses as economy grows by half forecast

The economy’s relatively high import bill remains unsustainable at $5.35 billion in 2016, against exports of $3.365 billion while a downturn in overall export performance is estimated for 2016, with exports falling by 6.9 percent to $3.365 billion, from $3.614 billion last year.

Capital inflows — foreign direct investment, portfolio investment and loans — are expected to reach $692.4 million in 2016, against $1.2 billion recorded in 2015.

“Given the declining trends and low levels of capital inflows it is imperative that the country continues to expedite the re-engagement process with the international financial institutions,” said Chinamasa.

In a bid to attract FDI Chinamasa proposed tax incentives for investors setting up shop in the Special Economic Zones. Firms in the SEZ will be exempted from paying corporate tax for 5 years and will also be allowed to import capital goods and raw materials free of duty in that time.

While aggregate demand has remained depressed throughout 2016 Chinamasa said the issuance of bond notes would increase liquidity and spur private spending.

As at October 31, 2016, Zimbabwe’s public debt stood at $11.2 billion or 79 percent of GDP, of which $7.5 billion, 53 percent of GDP, is external debt. About $5.2 billion of that is in arrears, and leading to a deterioration of relations with major creditors and inhibiting access to new finance, Chinamasa added.

The domestic debt as at 31 October 2016, stood at $3.7 billion, representing 26 of GDP.

Chinamasa said the mismatch between revenues and expenditures required government to rationalise expenditures in line with sustainable financing capacity. He proposed a moratorium on treasury bill issuances and confining borrowing to concessional rates.

The 2017 budget sets aside $188 million for infrastructure and utilities, which will be complemented by resources from statutory funds, respective state owned enterprises, development partners and loans.

Total development partner support for 2017 is projected at $450.4 million, against $493.7 million availed in 2016. Of this amount $233.7 million is from bilateral partners, while $216.7 million is from multilateral partners.-The Source

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