Zimbabwe’s economy grew by 4 percent in 2018, which was below the set target of 4.5 percent, according to latest figures from the Ministry of Finance and Economic Development’s fourth quarter report ending December 2018.

The lower economic growth was perhaps attributable to the economic challenges the country faced during the year, which were exacerbated by foreign currency shortages.

But on a positive note, the growth was underpinned by solid performances in the construction, agriculture and mining sectors following 2017’s policy reforms including the repeal of the Indigenisation and Economic Empowerment Act in the mining sector, with the exception of platinum and diamond extractive sectors.

The agriculture sector accounting for 33.31% of the nation’s export revenue, registered a 12.4% growth in 2018, against a projection of 10.7%, as tobacco output at 252 million kg surpassed historical record levels albeit a delayed onset of rain in the 2017/18 cropping season.

The Government has committed to macroeconomic reforms that will likely have impact on the longer-term.

“The key to managing any budget, whether a household or a country, is to not spend more than you have.
For years, that is unfortunately exactly what our governments have done, and the first step towards progress is to return the fiscal deficit to sustainable levels; both through cutting unnecessary spending and increasing revenue,” said Finance Minister Mthuli Ncube recently.

“The target for 2019 is ambitious, but attainable: To reduce the budget deficit from about 12% of GDP to 5%.

“Over the past four months, we have made significant cuts to expenditure in five main areas: First, we have ended the unsustainable practice of issuing Treasury Bills to finance the deficit, forcing us to spend within our means and within the budget.”

Monetary authorities have also played their hand by introducing the inter-bank foreign exchange market and the removal of the 1:1 peg between the United States dollar and the then fiat local currency.

The floating of forex trading is expected to curb the inflationary effects of black market forex trading as well as bring stability to the markets.

Meanwhile, Treasury said Government’s foreign and domestic debt last year stood at $17.8 billion, with 46 percent of that amount owed to foreign lenders.