Zimbabwe’s Finance Minister Patrick Chinamasa on Thursday presented the 2018 budget which included a raft of business- and investor-friendly proposals as well as plans to tackle corruption and waste.
The measures include the partial repeal of a controversial indigenisation law passed under former president Robert Mugabe that had limited foreign ownership of local businesses to 49 percent.
The $5.1 billion (4.32 billion euros) budget, the first since Mugabe’s shock resignation on November 21, must now be passed by parliament.
It also contains measures to tackle corruption and waste, including a ban on first-class air travel for officials except the president and his deputy, a reduction in overseas diplomatic posts and compulsory retirement for civil servants over 65.
“Government will attract both domestic and international investment by implementing investor-friendly policies,” said Chinamasa, who was reappointed as finance minister by Zimbabwe’s new president, Emmerson Mnangagwa.
He said Zimbabwe needed to reestablish its credibility with global financiers in order to relieve chronic cash shortages, a dearth of foreign exchange and a gaping budget deficit.
Repairing strained ties
Zimbabwe would also seek to mend strained ties with Britain, the European Union and the United States while attempting to secure new lines of credit from the World Bank and International Monetary Fund, he said.
The country is currently in arrears to the World Bank and other creditors to the tune of around $5 billion.
Chinamasa forecast the economy would grow by 4.5 percent in 2018, driven by his austerity measures and anticipated growth in the mining and agricultural sectors.
The country’s economic growth has slowed sharply from an average eight percent between 2009 and 2012, to less than one percent last year, while the deficit rose as high as 10 percent of the economy.
The indigenisation law, which was blamed for scaring away investors as it required foreign companies to hand up to 51 percent shareholdings to local partners, will still apply to overseas diamond and platinum miners.
Selling off state firms
To cut waste, the government will also institute a hiring freeze, abolish posts handed to members of the ruling party’s youth wing and sell-off loss-making state companies.
As much as $3.2 billion of next year’s budget will be required to pay the country’s mammoth state wage bill.
As he took over last month, Mnangagwa promised to create jobs in a country where unemployment ballooned to 90 percent under the ruinous financial mismanagement of his predecessor.
In one of his first acts as president, Mnangagwa ordered a three-month amnesty for the return of stolen funds to the country.
Mugabe’s seizure of white-owned commercial farms is widely blamed for the financial implosion and the sharp decline in production from the year 2000 that caused the economy to halve in size.