Zim economy performed better amid Covid-19, claims Mthuli

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Mugove Tafirenyika

FINANCE minister Mthuli Ncube has sensationally claimed that the country’s economy is one of the few in the world performing well during this coronavirus (Covid-19) pandemic, the Daily News reports.

Reacting to comments by MPs to the mid-term budget and economic review statement to Parliament by Budget and Finance Committee chairperson Felix Mhona, Ncube said despite the country’s economy experiencing negative growth, it remains amongst the best performers.

“The report notes the anaemic growth, generally due to Covid-19 that is panning out across the globe; in fact a negative growth frankly but still Zimbabwe is certainly not the worst in terms of negative growth at the moment.

“Actually, in Southern and Sub-Saharan Africa, it is performing slightly better than the rest of the developed world. Although it is all negative growth I must say, it is still slightly better than the rest of the world.

“It is all due to Covid-19, an invisible enemy. It is a serious issue,” Ncube said.

Ncube’s sentiments did not go down well with former Finance minister Tendai Biti who argued that the minister was using the Covid-19 pandemic as a scapegoat for his failure to turn around the country’s economy.

Biti insisted that the majority of the challenges the economy was grappling with, including high unemployment rate, low productivity, reliance on imports and corruption — both in the private and public sectors — had been inherent characteristics of the country prior to the outbreak of the lethal pandemic.

“The country is arrested by new productivity. The growth rate that we anticipated in 2020, the growth rate that we have seen in the last five years is depressing.

“The minister himself acknowledges low levels of growth that are stipulated in 2020.

“In his letters to the IFI on April 2, 2020, the minister actually projects that our growth rate is as low as minus 20 percent in 2020.

“Madam Speaker, there is the issue of unemployment…95 percent of our people are employed outside the formal employment sector. We have people who are in their 40s right now who have never been formally employed,” Biti said.

According to the committee’s report, the economy is expected to contract by 4,5 percent owing to inflationary pressures, reduced aggregate demand and foreign currency challenges.

“The growth projection is worrisome in the context of global growth projection of -4,9 percent and Sub Saharan Africa’s growth projection of -3,2 percent.

“The committee is concerned with inflation projections as inflation is expected to gradually decline in the second half of 2020, from the peak of 785,5 percent in May 2020, to 300 percent in December 2020 as it responds to current monetary and fiscal policy intervention.

“The auction system has not addressed price indexing to the parallel market, especially in the famous ‘tuck-shops’ which are excluded from participating in the auction system.

“Credibility issues also creep in as economic agents recall the assurances they were given in the 2020 budget that monthly inflation was expected to fall to single digit figures from the first quarter of 2020 to close the year around two percent on the back of commitment by the Central Bank to fight inflation through implementing an active reserve money targeting programme,” reads the report.

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