Nov. 15 (Bloomberg) -- Zimbabwean Finance Minister Tendai Biti cut the country’s growth forecasts to 4.4 percent for this year and 5 percent for 2013, citing a high budget deficit and the cost of state wages.
“Growth in 2013 will be 5 percent and this is a disaster,” Biti said while presenting Zimbabwe’s national budget in Parliament today. “We’re killing a rat, but eating an elephant,” he said, referring to a budget deficit of $260 million.
Zimbabwe is spending 8.6 percent of GDP on imports, while $1.2 billion of the country’s $3.5 billion in revenue is spent on state wages, Biti said. “This isn’t sustainable and we have to deal with the supply-side of the economy.”
Biti, who is also secretary general of the Movement for Democratic Change party which shares power with President Robert Mugabe’s Zimbabwe African National Union-Patriotic Front, said he would find the cash to finance elections and a constitutional referendum next year.
“You can’t have peace unless you pay for it,” he said. “We will have to fund a referendum and an election. Those elections must be free of violence. Violence is a major threat to the economy.”
Under an agreement brokered by the Southern African Development Community in 2008 and 2009, Zimbabwe’s sparring political parties must end their power-sharing arrangement following a new constitution and an election. The accord came out of failed elections in 2008 that were declared void by SADC after attacks on MDC supporters.
Moves to regulate Zimbabwe’s banking sector will take place next year, Biti told parliament today.
“There’s a lack of strategic thinking by foreign-owned banks operating in Zimbabwe,” he said. “I am extremely mortified and mystified by them. We are now moving in to regulate the sector.”
Biti, together with Zimbabwe’s central bank, has failed to sell treasury bills to foreign banks in recent months after the banks offered interest rates unacceptable to the government.
“We have had misadventures on the issue of treasury bills and we are now taking major measures to resolve this,” said Biti. “The Bankers’ Association of Zimbabwe and the central bank will have to sit down and agree on the manner on which the lending rate is defined.”
Biti said four banks hold 80 percent of all deposits in Zimbabwe. He didn’t name the banks.
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