Zimbabwe Wednesday unveiled a US$2.3 billion national budget for 2010, saying its economy had turned the corner and was now solidly growing after more than a decade of consecutive decline.
Finance Minister Tendai Biti, presenting the budget in parliament, said the economy would grow by seven percent next year on the back of recoveries in the key agriculture, mining, manufacturing and tourism sectors.
He revised this year’s economic growth upwards from 3.7 percent to 4.7 percent, again on the back of strong performance by the agriculture, manufacturing, mining and tourism industries.
He said all the four sectors had chalked up impressive growth in the year, with agriculture topping with 10 percent, and manufacturing second with eight percent.
Next year, Biti said mining was projected to grow by a whooping 40 percent, and the other three sectors by an average of 10 percent.
“The economy, which was initially projected to grow for the first time in 10 years by 3.7 percent in 2009, is now expected to register a higher growth rate of 4.7 percent, compared to a decline of more than -10 percent registered in 2008,” he said.
“This positive growth is largely underpinned by improved performance in sectors of agriculture, mining, manufacturing and tourism which previously recorded persistent decline in growth rates during 2000-2008,” he added.
Biti outlined a series of measures, mainly tax concessions to companies and individuals alike, to spur greater investment to underpin bourgeoning economic recovery.
He cut corporate tax from 30 percent to 25 percent, and income tax for high earners from 37 percent to 35 percent.
Investors had always complained the country’s tax levels were too high, and uncompetitive, but Biti said the tax concessions would help attract more investment into the country, particularly from abroad.
He also announced heavy state investment in power, transport infrastruture such as rail, telecommunications and water which he said were key to ensuring economic growth.
Zimbabwe faces severe power rationing, and other key infrastructure in the country is delapidated because of lack of investment in the last 10 years.
Biti said the country had also contained hyper-inflation, which only last year was over a billion percent, through the introduction of foreign currencies as legal tender in place of the Zimbabwe dollar.
He said the country was projecting inflation of -5.5 percent this year, and 5.1 percent next year.
“I believe that Zimbabwe is a sleeping giant in a hole, and slowly we are getting out of this hole,” he said.