Zim recovery hinges on fiscal, monetary policies

LIVINGSTONE MARUFU

A local equity research firm, fincent securities said the country’s economic recovery largely depends on its economic policies to progress or retrogress.

Zimbabwe is banking on agriculture’s stellar performance but the extra cost incurred to combat the Covid-19 pandemic is likely going to eat into grain import savings.

But market analysts believe firm policies and policy consistency are key to economic recovery.

“The projected recovery is largely dependent on prudent fiscal and monetary policies to harness macroeconomic stability.

“The fiscal balance is projected to turn into a deficit in 2021 but will remain within sustainable limits,” Fincent said in its recovery uncertain report.

The research firm said the effective management of public finances will depend on continued measures to ensure tight control of expenditures particularly public wages, while at the same time provide adequate resources for basic service delivery.

“Conservative monetary policies are expected to reduce inflation and stabilise prices in the medium term. Assuming appropriate policies, prices could stabilise by 2022 at a much lower inflation rate of around 22%,” the research firm said.

The report said in the face all of the adversity for the past two years, the medium-term outlook points to a modest economic recovery in 2021 and even stronger growth outcomes in 2022.

The recovery is marred with uncertainties as to its strength and the pandemic-related downside risks both on a local and global level.