October 29, 2009 / 10:34 AM / in 9 years

IMF says Zimbabwe GDP to grow 3 pct in 2009

Zimbabwe's President Robert Mugabe and Prime Minister Morgan Tsvangirai attend the Zimbabwe international investment conference in Harare July 9, 2009. REUTERS/Philimon Bulawayo

HARARE (Reuters) - The International Monetary Fund reiterated on Thursday that Zimbabwe’s economy would grow by three percent due to improved policies but would need political consensus to continue cash budgeting and to put a lid on wage demands.

“As a result of these improved policies, real GDP is projected to grow by about 3 percent,” Vitaliy Kramarenko, an IMF official who led a team to review the government’s economic programmes, said in a statement.

The southern African country has suffered a decade of economic meltdown, worsened by the withdrawal of crucial Western funding over policy differences with the previous government of President Robert Mugabe.

But the formation of a coalition government between Mugabe and long-time rival Morgan Tsvangirai in February has seen the new administration implement policies to stabilise the economy.

The IMF stopped balance of payment support to Zimbabwe in 1999 and while it resumed technical assistance to the country after the formation of a new unity government this year, it said on Thursday it would be some time before it resumed direct aid.

“Access to IMF lending facilities would require a sustained track record of sound policies and donor support for the clearance of arrears to official creditors,” Kramarenko said.

Kramarenko said the new government needed to build consensus to continue with its cash budgeting and to restrain wage demands in a country where government employees have gone on strike to demand higher salaries from the $150 they get every month.

Zimbabwe’s Finance Minister Tendai Biti will present the 2010 national budget next month and would be under pressure from unions to raise salaries of state employees.

“Political consensus needs to be forged for continuing cash budgeting, exercising wage restraint while re-orienting expenditures to development needs,” he said.

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