Zimbabwe economy on mend, 7 % growth focused in 2010

HARARE- Zimbabwe's battered economy is on track to expand for the first time in a decade this year and to grow by 7 percent in 2010 as key sectors such as agriculture and mining start to recover, the finance minister said on Wednesday.

Finance Minister Tendai Biti delivered the first full budget since a unity government was set up 10 months ago between President Robert Mugabe and his opponents to try to end a crippling economic and political crisis.

"In 2010 we are working on the assumption that the GDP will grow by 7 percent," Biti said.

The new growth figure was substantially below the 12.5 percent growth estimate for next year given by another minister last month.

But Biti said Zimbabwe’s economy is expected to grow by a better-than-expected 4.7 percent this year.

"The economy was originally set to grow by 3.7 percent but we are now expecting it to grow by 4.7 percent compared to (a) 10.9 percent decline in 2008," he told parliament.

"This is on the back of improved performance in agriculture, mining, manufacturing and tourism," Biti said.

Zimbabwe is battling to reconstruct the economy that the government estimates contracted by nearly 50 percent from 2000-2008. 

But the global economic downturn and smouldering tensions in the power-sharing government of President Mugabe and his arch rival Prime Minister Morgan Tsvangirai, have made reconstruction efforts difficult.

Biti said government revenues were improving from around $4 million in March to $90 million in June. Total revenues for the period March to October was $685 million, below the government’s estimate of $789.8 million.

He said $210 million of a $510 million International Monetary Fund allocation, part of the IMF’s global assistance package to countries to help them cope with the worldwide financial crisis, would be spend on infrastructure.

The IMF allocation is the first major foreign aid Zimbabwe has received in a decade after Mugabe’s ZANU-PF party fell out with Western donors over its policies.