Zimbabwe Economic Update, June 2017 : The State in the Economy

Zimbabwe’s economy grew by 0.7 percent in 2016 despite the combined effect of the El Nino drought and domestic financial turmoil. The drought reduced agricultural output and increased food prices towards the end of the year, despite the government’...

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Main Author:	World Bank
Format:	Report
Language:	English en_US
Published:	World Bank, Washington, DC 2017
Subjects:	ECONOMIC GROWTH POVERTY FISCAL POLICY MONETARY POLICY TRADE LOCAL GOVERNMENT STATE-OWNED ENTERPRISES
Online Access:	http://documents.worldbank.org/curated/en/333081497536246610/The-state-in-the-economy http://hdl.handle.net/10986/27474

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recordtype	oai_dc
spelling	okr-10986-274742021-05-25T09:01:00Z Zimbabwe Economic Update, June 2017 : The State in the Economy World Bank ECONOMIC GROWTH POVERTY FISCAL POLICY MONETARY POLICY TRADE LOCAL GOVERNMENT STATE-OWNED ENTERPRISES Zimbabwe’s economy grew by 0.7 percent in 2016 despite the combined effect of the El Nino drought and domestic financial turmoil. The drought reduced agricultural output and increased food prices towards the end of the year, despite the government’s efforts to boost production and stabilize prices. The public provision of agricultural inputs, the creation of food-for-work programs, and the establishment of price supports for staple foods accentuated the government’s expansionary fiscal-policy stance. Meanwhile, the government also increased spending on a cash basis to clear domestic arrears. The authorities financed much of the widening fiscal deficit by issuing Treasury bills purchased by commercial banks and a US$ 1 billion overdrafts with the RBZ. As domestic borrowing reduced liquidity and crowded out credit to the private sector, demand fell, imports contracted sharply, and economic growth slowed. Good rains are projected to boost growth in 2017 but other sectors remain lackluster. To allow GDP growth to recover in 2017 and beyond, the authorities will need to improve public expenditure efficiency and ensure adequate liquidity in the financial sector. The newly introduced command agriculture program provided farmers with inputs which are to be repaid by delivering grain to the Grain Marketing Board at the end of the growing season. These policies are projected to boost agricultural output in 2017. However, government intervention is both expensive and inefficient, especially the use of price support, as floor prices are set far higher than import competing prices.4 Favorable rains during the 2016/17 agricultural season are expected to drive a robust recovery, and the agricultural sector is projected to make a sizeable contribution to GDP growth in 2017. Improving weather conditions will be complemented by the ongoing suspension of import duties on some fertilizer products through end-2017, and by the ongoing allocation of underutilized land managed by the parastatal ARDA and other government agencies to experienced farmers. 2017-06-29T21:16:34Z 2017-06-29T21:16:34Z 2017-06-21 Report http://documents.worldbank.org/curated/en/333081497536246610/The-state-in-the-economy http://hdl.handle.net/10986/27474 English en_US CC BY 3.0 IGO http://creativecommons.org/licenses/by/3.0/igo World Bank World Bank, Washington, DC Economic & Sector Work :: Economic Updates and Modeling Economic & Sector Work Africa Zimbabwe
repository_type	Digital Repository
institution_category	Foreign Institution
institution	Digital Repositories
building	World Bank Open Knowledge Repository
collection	World Bank
language	English en_US
topic	ECONOMIC GROWTH POVERTY FISCAL POLICY MONETARY POLICY TRADE LOCAL GOVERNMENT STATE-OWNED ENTERPRISES
spellingShingle	ECONOMIC GROWTH POVERTY FISCAL POLICY MONETARY POLICY TRADE LOCAL GOVERNMENT STATE-OWNED ENTERPRISES World Bank Zimbabwe Economic Update, June 2017 : The State in the Economy
geographic_facet	Africa Zimbabwe
description	Zimbabwe’s economy grew by 0.7 percent in 2016 despite the combined effect of the El Nino drought and domestic financial turmoil. The drought reduced agricultural output and increased food prices towards the end of the year, despite the government’s efforts to boost production and stabilize prices. The public provision of agricultural inputs, the creation of food-for-work programs, and the establishment of price supports for staple foods accentuated the government’s expansionary fiscal-policy stance. Meanwhile, the government also increased spending on a cash basis to clear domestic arrears. The authorities financed much of the widening fiscal deficit by issuing Treasury bills purchased by commercial banks and a US$ 1 billion overdrafts with the RBZ. As domestic borrowing reduced liquidity and crowded out credit to the private sector, demand fell, imports contracted sharply, and economic growth slowed. Good rains are projected to boost growth in 2017 but other sectors remain lackluster. To allow GDP growth to recover in 2017 and beyond, the authorities will need to improve public expenditure efficiency and ensure adequate liquidity in the financial sector. The newly introduced command agriculture program provided farmers with inputs which are to be repaid by delivering grain to the Grain Marketing Board at the end of the growing season. These policies are projected to boost agricultural output in 2017. However, government intervention is both expensive and inefficient, especially the use of price support, as floor prices are set far higher than import competing prices.4 Favorable rains during the 2016/17 agricultural season are expected to drive a robust recovery, and the agricultural sector is projected to make a sizeable contribution to GDP growth in 2017. Improving weather conditions will be complemented by the ongoing suspension of import duties on some fertilizer products through end-2017, and by the ongoing allocation of underutilized land managed by the parastatal ARDA and other government agencies to experienced farmers.
format	Report
author	World Bank
author_facet	World Bank
author_sort	World Bank
title	Zimbabwe Economic Update, June 2017 : The State in the Economy
title_short	Zimbabwe Economic Update, June 2017 : The State in the Economy
title_full	Zimbabwe Economic Update, June 2017 : The State in the Economy
title_fullStr	Zimbabwe Economic Update, June 2017 : The State in the Economy
title_full_unstemmed	Zimbabwe Economic Update, June 2017 : The State in the Economy
title_sort	zimbabwe economic update, june 2017 : the state in the economy
publisher	World Bank, Washington, DC
publishDate	2017
url	http://documents.worldbank.org/curated/en/333081497536246610/The-state-in-the-economy http://hdl.handle.net/10986/27474
_version_	1764464622972174336

Zimbabwe Economic Update, June 2017 : The State in the Economy

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