Zimbabwe attempts to restore investor confidence

26 Nov 2021

Zimbabwe’s finance minister said the country is targeting small deficits and a steep fall in inflation over the next few years, as it attempts to boost investor confidence.

President Emmerson Mnangagwa, who assumed office in 2017, has struggled to revive the economy that had been devastated by hyperinflation and irregular policymaking under his predecessor, Robert Mugabe.

However, following two years of contraction in 2019 and 2020, Zimbabwe’s economy is forecast to rebound by 7.8% in 2021, and according to Finance Minister Mthuli Ncube, the recovery can continue.

During a parliamentary budget speech, Ncube forecast 5.5% economic growth in 2022, and added that the aim was for a deficit of 1.5% of GDP next year and 1.7% of GDP in 2023, Reuters reports.

He went on to add that fiscal policy would be cautious and the government wouldn’t resort to printing money to finance the deficit, as was the case under Mugabe’s rule.

Moreover, annual inflation is predicted to decline from 94.6% this year to 32.6% in 2011 and 17.5% in 2023, according to a presentation by the finance ministry.

Up to now, President Mnangagwa has not been able to repair relations with Western governments, which have accused Zimbabwe’s government of rights abuses and rough treatment of the opposition.

The country’s economic difficulties are shown in its currency, which was reintroduced in 2019, 10 years after Zimbabwe dollarized to ease hyperinflation.

The Zimbabwean dollar trades at substantial discounts on the black market, and a recent weak spell hindered plans to limit inflation.

Furthermore, data published on Thursday revealed consumer inflation increased to 58.4% year-on-year in November, from October’s reading of 54.5%.