Zimbabwe President Says ‘Fight Still On’ to Fix Broken Economy

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Zimbabwean President Emmerson Mnangagwa says the “fight is still on” to fix the broken economy, signaling out the financial industry for resisting the economic turnaround efforts.

“We now know whom we are fighting and who is behind them,” Mnangagwa said on Saturday in an interview with state-owned Zimbabwe Broadcasting Corp. “This helps us to bring about the correct instruments to deal with the financial services sector for it to serve this country and not to serve foreign interests.” He provided no further details.

The government has accused domestic banks, telecommunications operators and other businesses of making excessive profits off the hard currency it makes available at auctions.

The Zimbabwe dollar now trades at 84 to the U.S. dollar after being pegged at parity just two years ago. Many goods and services including fuel are priced in U.S. dollars or greenback equivalents, placing them out of the reach of most Zimbabweans who earn local currency. Teachers who were paid a minimum of $500 three years ago, now earn the equivalent of $213. The incomes of most workers have also shrunk.

Zimbabwe President Says ‘Fight Still On’ to Fix Broken Economy

Action by the government to penalize the financial industry may hinder efforts by Finance Minister Mthuli Ncube, who went on a global investor roadshow this week to attract investment.

Mnangagwa has previously issued warnings to private companies he blames for undermining his efforts to turn around an economy plagued by annual inflation of 241% and chronic foreign-currency shortages. The November budget projected that gross domestic product will expand 7.4% this year, a rebound from a 4.1% contraction in 2020 that was attributed to the coronavirus, associated lockdowns and a second successive year of drought. The International Monetary Fund expects 3.1% economic growth this year compared with an earlier forecast of 4.2% expansion.

Last year, his government closed the Zimbabwe Stock Exchange for five weeks and singled out the largest mobile operator, Econet Wireless Zimbabwe Ltd., for undermining the nation’s currency through its mobile-money service. Econet denied the allegations.

Other Highlights:

  • Zimbabwe hasn’t “done badly” in its efforts to mitigate against the spread of the coronavirus. Without any virus funding from the World Bank and the IMF, domestic resources in excess of $100 million were raised to fight the coronavirus.
  • Relations have improved with the European Union, political dialog and trade activities established with France, Germany and Belgium.
  • The projections of more waves of Covid-19 make the government cast doubt on the Treasury’s GDP forecasts of 7.4%. “With the pandemic which affects economic activity, you cannot again stick to that. We have to revise,” Mnangagwa said.

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