THE country’s economic woes are set to continue in 2004 unless government takes measures to introduce new economic policies, a leading economist has said.
Giving a projection for 2004, Bulawayo-based economist Eric Bloch said government has to implement at least five points that would lead to the country’s economic revival.
Bloch said the points include the restoration of relations with the international community, the implementation of the new monetary policy announced by Reserve Bank of Zimbabwe (RBZ) Governor Gideon Gono, the restoration of agricultural viability, a massive cutback of government expenditure and a commitment to the restoration of law and order.
“We have to implement fully the monetary policy as announced by the governor of the Reserve Bank on December 18 with the flexibility that if the circumstances change during the year we must be prepared to modify those policies appropriately without being rigid,” Bloch said.
He said it was important for the country to restore agricultural viability without reversing the land reform process but restructuring problem areas.
“We need not reverse the land reform process but we need to restructure it by developing new resettled commercial farmers because agriculture is the base of the economy,” he said.
On international relations, Bloch said it was important to restore ties with the international community, notably with financial institutions.
“We have to restore relations with the international community, especially with the IMF and the World Bank and to understand that we have to restore law and order because without doing that we would not be able to repair the relationships and demonstrate that Zimbabwe is going to be a true democracy because that also is a prerequisite for repairing our relationships with the international community,” Bloch said.
He said the current government expenditure was fuelling inflation and said there was a need for government to reduce its spending.
“There should be a massive cutback in government spending because that is the major trigger of inflation and unless we manage to bring inflation under control, all other measures will not bring the economy right,” he said.
Bloch said many of Gono’s proposals are useful for controlling inflation but they would be counteracted by any continued effects of borrowing by government to fund deficits.
“Just in the last two days government has given a huge increment of 250% to civil servants. On the one hand that is correct for they could not survive on that but on the other hand if government continues to borrow to fund other expenditure that accelerates the rate of inflation and makes continuance of inflation unavoidable,” he said.
Bloch said other factors that needed to be addressed by government included encouraging job creation and strengthening of the informal sector.
He said the introduction of Value Added Tax (VAT) would force informal sector entrepreneurs to get organised and benefit from any government programmes.
Bloch said if things continue as they are, inflation would continue to rise, shortages would persist and unemployment would increase.