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Zim's solutions 'piecemeal'
27/01/2005 16:55 - (SA)
Harare - Zimbabwe's central bank chief's prescriptions to kickstart the battered economy and slash the world's highest inflation rate to a single digit ignore the core problems, analysts said on Thursday.
"What the central bank has done is provide piecemeal solutions to problems that are in fact just symptoms and not the real problems," leading economist Peter Robinson told AFP.
"You need to have a comprehensive package," he said.
Reserve Bank Governor Gideon Gono on Wednesday unveiled a sweeping policy in which he pledged to bring down inflation drastically, woo foreign investment and clean up the ailing banking sector.
Burgeoning unemployment, a high poverty rate and a free-falling currency - which however has now comparatively stabilised - and the southern African nation's isolation from the West have not helped matters.
"You need basic things like the rule of law to get foreign investment and a guarantee that if you invest, your property will not be expropriated," Robinson said.
"That way you have more foreign currency inflows, jobs and everything else will follow."
Gono on Wednesday said inflation, which had peaked to 600% last year, should fall to between 20% and 35% in 2005 and reach a single digit in 2006.
He said that although there was a drastic fall in December to 132.6%, the country still had the world's highest inflation rate.
The bank chief touted 2005 as the "year of investment" and warned of a crackdown on state-run behemoths which were overstaffed, unproductive and often misusing their position to raise prices at random.
"A greater number of them... no longer have strategic plans, budgets or audited sets of accounts while some have bloated manpower levels whose presence is inconsistent with business and revenue they are generating," he said.
Gono however hailed a record annual rise in foreign exchange inflows in 2004.
"The 12-month period to December 2004, saw foreign exchange inflows into the official market amounting to a total of US$1.7bn compared to a total of US$301m in 2003.
"This represents a phenomenal growth," he said, adding that Zimbabwe hoped to surpass its highest foreign exchange inflow level of US$3.8bn - achieved in 1996 - by the end of 2006.
Economic analyst Witness Chinyama said this was easier said than done.
"The government needs to put in laws and policies that attract foreign investment and capital inflows from multilateral financial institutions like the IMF and the World Bank."
Gono has warned of a shake-up in the country's bruised financial sector, where seven banks were placed under curatorship in 2004.
"Unfortunately... some among these licensed bankers surreptiously took depositors' funds with a full, predetermined and calculated intention never to give back those funds to their rightful owners," he said.
There will be new audit and other checks to prevent such cases as well as "deeper and wider disclosure requirements", he said.
- SAPA
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