18 October 2011

Zimbabwe: African Development Bank Team in Country

A FIVE-MEMBER delegation from the African Development Bank is on a one-week visit to hold discussions with the Government and assess the economy as part of AfDB's routine missions to member countries.

This comes after the AfDB disbursed US$206 million to Zimbabwe for its infrastructure development programmes.

AfDB country resident representative Mr Maha-madu Bawumia said in Harare yesterday the five-member team would be here until tomorrow.

Mr Bawumia said AfDB's director for financial markets Mrs Kodeija Biallo was leading the delegation for a firsthand appraisal of the situation in the country.

It is part of our routine exercises in member-countries," he said.

"It is an issue of engaging with member-countries to know what is happening and not simply rely on reports (from local office)."

AfDB has set aside a US$500-billion debt clearance facility for Zimbabwe. The bank said the facility would be extended to other countries if was not used in Zimbabwe.

But to access most of the funding, Zimbabwe was expected to implement an acceptable macro-economic framework and prescribed policies.

In its monthly economic report last month, the AfDB said the country's economic growth targets were still achievable, despite the constraints it faced.

The bank cited frequent power cuts, the recent hike of electricity tariffs, tight liquidity and price increases as factors that should be addressed urgently.

Finance Minister Tendai Biti, in his 2011 National Budget Statement, projected that the economy would this year grow by an average of 9,3 percent. This would largely be anchored by growth in mining and agriculture.

Minister Biti also projected that the prevailing economic stability meant annual inflation would also end the year within the 4,5 percent range.

But the bank expressed fears that the recent spate of price increases for basic commodities after the duty review could affect year-end inflation targets.

"The re-introduction of import duty on some basic commodities led to price increases for these commodities.

"The price hike, if not reversed, could militate against achievement of year-end inflation target of 4 percent.

"There is need to address these price hikes, given that the import duty reintroduction was aimed at protecting local producers against cheap imports in a bid to support local industry (to aid its recovery)," said the bank.

Zesa Holdings' 31 percent increase in power tariffs resulted in the rate rising to an average US9,83c from US7,53c per kilowatt-hour effective last month, would most likely put pressure on annual inflation.

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