ESAP torpedoed

Zimbabwe’s economic structural adjustment programme which was already six months behind schedule has been torpedoed by the current drought whose severity is becoming more obvious by the day.

Cereal production is estimated to be 20 per cent below normal. Grazing has disappeared. Beef now in plenty supply is expected to run short before the end of the year. Sugar production will be below 10 per cent.

The First Merchant Banks says in its quarterly guide to the economy, by all measures the country has entered a very difficult phase of history but the difficulties were already profound before the drought.

The government has not met its commitment to scale down the size of the civil service and public sector spending was being maintained at more than 50 percent of gross domestic product. The government was therefore continuing to compete for scarce resources at considerable cost to growth prospects. As a result the quality of raw materials and components made available on open general import licence fell short of the 50 per cent target that was intended by the end of 1991.

In its effort to bring ESAP back on course, and to correct the more immediate problems caused by the growing balance of payments deficits as well as the slow rate of arrival of funding from the 1991 Paris meeting, the government had found it necessary to arrange short term loans from commercial banks as a stop-gap measure.

It also approached the International Monetary Fund (IMF) for a $2.4 billion extended fund facility which was approved in January for disbursement over two years.

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