Zimbabwe economy seen hostage to anti-reform lobby

By Cris Chinaka

HARARE (Reuters) - Zimbabwe's new investment incentives may help efforts towards economic recovery, but analysts say the country will not prosper without radical political reforms.

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.