Zimbabwe Economy in Trouble as Debts Baloon
Economist and former president of the Confederation of Zimbabwe Industries Calisto Jokonya says Zimbabwe needs to reform to attract significant investment
WASHINGTON DC — Zimbabwe’s plans to quickly turn around the economy have hit a snag due to mounting debts and lack of foreign direct investment. In what economists are calling a worrying development, treasury reported a $74 million budget deficit for the month of July as recurrent expenditure continued its upward trend. Economists are also warning that a bloated cabinet, devolution and a bonus for civil servants will widen the government deficit. Finance Minister Patrick Chinamasa told the International Monetary Fund and the World Bank last week that it will be difficult to turn around the economy without additional loans. But the two organizations told Zimbabwe it has to settle its external debt totaling more than $10 billion before asking for additional funding. The Chamber of Mines has already indicated that Zimbabwe's mining sector requires $5 billion to ramp up production. Mining contributes about 13 percent of the country’s gross domestic product, making it a significant contributor to the Zimbabwe economy. The Confederation of Zimbabwe Industries (CZI) said this month the manufacturing sector remains in crisis, with average capacity utilization plummeting to 39 percent in 2013, from 44.2 percent in 2012. Economist and former CZI president Calisto Jokonya said Zimbabwe needs to reform to attract investment.