Finance Minister Tendai Biti announced a raft of import tax cuts for fuel, capital goods and raw materials in a mid-year budget review on Thursday and called on the new unity government to put the battered economy on a path to sustainable growth.
"The measures announced by the minister are very welcome, but on their own they are not going to help much," said John Robertson, a leading economic consultant.
"There are serious political issues over farm invasions, private property rights and governance that need to be sorted out by politicians to build up investor confidence," he said.
Biti said a unity government formed by President Robert Mugabe and his arch-rival Morgan Tsvangirai in February to try to ease a severe crisis had planted seeds for economic growth.
The Zimbabwe economy was expected to grow by 3.7 percent in 2009 after collapsing by about 70 percent, while inflation was seen at 6.4 percent by year-end, he said, down from 500 billion percent in December 2008, according to IMF estimates.
Mugabe, 85 and in power since independence from Britain in 1980, says the economy has been sabotaged by powers opposed to his seizures of white-owned farms for landless blacks.
Biti, who is a member of Tsvangirai’s Movement for Democratic Change (MDC), also said the new administration needed to convince investors that it can survive and will respect human and private property rights.
CREDIBILITY AT STAKE
In what appeared to be an indirect attack on Tsvangirai, who as prime minister has been defending his working relations with Mugabe as "cordial," Biti said the credibility of the unity government was at stake and the principal leaders had to respect the global political agreement that brought them together, "not only in having tea together."
"We can come up with beautiful policies but if there is no confidence the economy will not grow much or go far," he said in his two-hour budget review statement.
Western donors told Tsvangirai during a three-week fundraising trip to the United States and Europe last month that they will only come to Zimbabwe’s economic rescue when it creates a democracy and improves human rights after decades of what critics call repressive one-party rule under Mugabe.
Tsvangirai told his Western hosts that there was no longer any systematic political violence in Zimbabwe and angered some of his supporters by dismissing as "isolated incidents" new invasions of white-owned farms by members of Mugabe’s ZANU-PF party. Critics called it a desperate bid for aid.
Zimbabwe says it needs about $10 billion for its emergency short-term economic recovery programme and has so far only managed to raise just over $1 billion, mostly in lines of credit from other African countries.
Biti says the government is still negotiating with many countries over aid, including China.
Political analyst Eldred Masunungure said while the economy was starting to show signs of recovery, it remained fragile and vulnerable to politicians.
"I agree with those who say the Zimbabwe economy is a hostage of politics, a hostage of those in government resisting reforms," he said. Reuters