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Zimbabwe, 19 February 2015: Economic forum seeks answers amid a tightening budget and sluggish economic growth

© UNICEF 2015
Zimbabwe's Reserve Bank Governor Dr. John Mangudya during the Fiscal Policy Dialogue.

19 February, HARARE, Zimbabwe – A high-level forum to explore ways of expanding Zimbabwe’s shrinking fiscal space ended in Harare on Thursday amid predictions of a slower economic growth and reduced domestic revenues in 2015.

Fiscal space is defined as room in a government´s budget that allows it to provide resources without jeopardizing its financial position or the stability of the economy.

The forum comprising policymakers from the Ministry of Finance, the Reserve Bank of Zimbabwe, the donor community, economic think tanks, and the private sector was convened by UNICEF, the Ministry of Finance, and the National Association of Non-Governmental Organizations. At issue was the lack of government capacity to finance its own programs outside recurrent costs, which according to 2015 estimates, account for 92 per cent of the USD 4.1 billion budget.

“We have very little room for maneouvre,” said Reserve Bank Governor John Mangudya. “We need to hold down expenditure, gradually reduce it, and at the same time explore ways of raising revenue. We need bold and pragmatic decisions that will get us out of this vicious cycle of low revenues and higher expenditures.”

After successive years of hyperinflation and contraction, Zimbabwe’s economy experienced relative stability when the United States dollar was adopted as official currency in 2009. The economy began to grow, reaching a peak of nearly 12 per cent in 2011 but that growth has dwindled to a projected 3.1 per cent in 2014 and 3.2 per cent in 2015. The net effect is domestic revenues falling short of targets and the government finding it increasingly difficult to finance its non-wage obligations.

“As is the case everywhere, in times when competition for resources is fierce, it is the social sectors that tend to be under-funded,” said UNICEF Representative Reza Hossaini. “We are worried that the current constrained fiscal space means financing of the social sectors continues to rely heavily on donors. This is not sustainable in the long-term and any reduction in funding could erode the gains we have made in the last five years.”

Those gains include a reduction in maternal and child mortality, increased access to water and sanitation, improved examination pass rates, and monthly cash grants provided to 55,000 poor households. Donors are currently funding over 70 per cent of social programs in Zimbabwe.  

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For further information, please contact:

Victor Chinyama, Chief of Communication, UNICEF Zimbabwe; Tel: +263 772 124 268; vchinyama@unicef.org

Elizabeth Mupfumira, Communication Specialist, UNICEF Zimbabwe; Tel: +263 772 124 277; emupfumira@unicef.org

 

 
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