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Zimbabwe economy’s plight worsens with COVID 19

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  • The IMF had slashed its 2020 economic growth projection for Zimbabwe from 2.7% to 0.8%
  • The economic growth fell in 2019, hit by climate shocks that stifled agriculture and electricity generation

COVID 19 that has crippled the global economy will worsen the plight of Zimbabwe’s economy, says The International Monetary Fund (IMF ) making it harder to balance macroeconomic stability. Even before the spread of the coronavirus the IMF had slashed its 2020 economic growth projection for Zimbabwe from 2.7% to 0.8% based on the poor performance of the agriculture sector and government’s incorrect policy measures. IMF pointed out that the economic growth fell sharply in 2019, hit by climate shocks that stifled agriculture and electricity generation. The raging inflation and the low international reserves aggravated the crisis. The newly introduced Zimbabwe dollar also lost most of its value. IMF attributed to the devaluation of the dollar to lack of implementation of reforms and missteps in foreign currency and monetary reforms.

With the onset of the pandemic, the country is under a 21-day lockdown with far-reaching disruptions of local businesses. IMF stated that Zimbabwe faced an economic and humanitarian crisis.

 President Emmerson Mnangagwa’s government after coming into power in 2018, adopted a reform agenda focused on macroeconomic stabilisation. Reforms such as fiscal consolidation that saw the re-introduction of the Zimbabwe dollar last year, the creation of an interbank foreign currency market, and restructuring of the financing of command agriculture were introduced. According to IMF, delays in re-engagement with the international community and Zimbabwe’s failure to define modalities and financing to clear arrears to the World Bank and other multilateral institutions etc became challenges for the economic revival constraining its access to external official support. It added that though the 2020 budget included a significant hike in social spending, it may not be sufficient to meet the pressing social needs.

Meanwhile, the World Food Programme (WFP)  report has identified Zimbabwe among the 18 countries in the world that are classified as hunger spots and overheated economies. Some of the other countries in the list included Haiti, Burkina Faso, Mali, and western Niger. Countries such as Nigeria, Iraq, Ethiopia etc were also mentioned in the report as food-insecure. The WFP warned that Zimbabwe’s economic collapse, political instability and social unrest may worsen in the coming months. It added that food inflation rose to over 700% by the end of 2019 and is likely to rise further during the peak of the lean season between harvests in the first quarter of 2020.The latest analysis from an International Food Classification report estimated that about 4.3 million people are facing severe acute food insecurity in the country and the figure is expected to rise.

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