HARARE, February 3 (The Source) – Zimbabwe and the World Bank have stepped up efforts to hammer out a financing programme, which could see the southern African country accessing funding from the institution should a debt clearance plan agreed with three major lenders be successfully executed, finance minister Patrick Chinamasa said on Wednesday.
A World Bank team has been in Zimbabwe over the past week to intensify contact with the authorities over a country strategy that would provide a framework for the institution’s relationship with Harare over the next few years.
Zimbabwe’s relations with the World Bank and fellow Bretton Woods institution, the International Monetary Fund (IMF) has improved considerably over the past six years, starting with a power-sharing government set up by President Robert Mugabe and the opposition following a disputed 2008 election. The re-engagement has continued even after Mugabe’s 2013 re-election, which was again disputed by the opposition.
Zimbabwe, which stopped servicing its loans in the late 1990s as its economic woes mounted, has been unable to access fresh loans from global lenders since then. However, in October the country agreed to a debt plan which will see $1,8 billion in arrears owed to the World Bank, IMF and African Development Bank (AfDB) cleared by mid-2016.
“The World Bank team is here to brainstorm on a country financing programme,” Chinamasa said at the launch of the World Bank’s Zimbabwe economic update in Harare.
“We are working frantically to produce a country strategy paper to determine funds required.”
He added that priority sectors for funding would be infrastructure, agriculture, mining and manufacturing, among others.
Chinamasa said the Zimbabwe government accepted the World Bank’s ‘frank’ assessment of the country’s economy, which has started to struggle for growth after an impressive rebound following dollarization in 2009. Before that, Zimbabwe’s economy had contracted by as much as 52 percent between 1998 and 2008.
Zimbabwe registered an average double digit growth between 2009 and 2011, but has come off to levels within the 2-3 percent range as the positive spinoffs from dollarization wane and commodity prices weaken.
The World Bank says Zimbabwe’s economy will grow by 1.5 percent in 2016 as the country’s outlook remains difficult on the back of adverse weather conditions and depressed commodity prices.
The bank said while other sectors such agricultural, mining and manufacturing were declining in recent years, the services sector had shown resilience with room for further growth.
The service sector, currently 60 percent of GDP, grew at an average rate of 8, 5 percent per year between 2010 and 2014.
Last year the sector recorded a 4,3 percent growth and this year is expected to grow by over 3 percent.
“Traditional sectors are facing key challenges and in the process of structural transformation, the services sector has continued to grow strongly, building on Zimbabwe’s key competitive advantage – its educated people,” World Bank senior economist Johannes Herderschee said.
Chinamasa, however, insists Zimbabwe is on course for a 2.7 percent GDP growth in 2016.
“Mining, agriculture and manufacturing should play their role and given the reforms we are undertaking we should be able to get to 2, 7 percent,” Chinamasa said.
“With a good mix of fiscal policies we can improve production in the mining sector, like we have done with the gold sector were we increased output by 30 percent to 20 tonnes. We are hoping we can achieve the same in growth in diamonds through the ongoing consolidation of the mines.”