Zimbabwe : current economic conditions

This paper reviews current economic conditions in Zimbabwe against the background of the GOZ"s efforts to redress these inequities while at the same time promoting economic growth. The GOZ"s economic reconstruction strategy is a complex one of: (1) maintaining traditional policies toward the modern economy; (2) investing in the reconstruction of tribal trust lands reserved for blacks while settling black farmers from those lands into underutilized areas of the commercial sector (which is usually reserved for whites); and (3) expanding government services, especially health and education, to blacks. The most pressing immediate need is to expand employment by 50,000 jobs per year and increase investment which has been constrained due to the limited availability of foreign exchange and lack of investor confidence. While a conservative policy towards imports has kept the country"s balance of payments relatively strong, the surplus has rarely covered burgeoning GOZ expenditures required by its reconstruction strategy and by its reorganization of the national security force. Although the alarming budget deficits that have resulted cannot, given the current political climate, be reduced by raising taxes, it is hoped that financing for the ZWD 515 million 1980/81 and anticipated ZWD 600 million 1981/82 deficits will be forthcoming from the private sector and the International Monetary Fund. Devaluation of the Zimbabwe dollar does not currently seem advisable. The author concludes that, to achieve its long-term reconstruction goals, the GOZ must attempt in the near term to instill confidence in the domestic and foreign business communities and in the black majority. A.I.D. has responded to the GOZ"s growth with equity program by providing direct asssistance to: (1) help Zimbabwe overcome its macroeconomic problems; (2) alleviate transport and manpower constraints; and (3) to raise the income of the poor by increasing agricultural productivity, employment, and social services. Fifteen statistical annexes containing basic economic data are appended.