Zimbabwe’s economy is facing significant challenges as the country’s growth rate is expected to slow down to 2% in 2024, due to the severe drought that has affected the agricultural sector.
Finance Minister Mthuli Ncube confirmed this during his 2024 mid-term budget review in Parliament on Thursday.
“The drought was more severe than initially expected, and agriculture will shrink by 21% this year.”
This decline in agricultural production will have a ripple effect on the entire economy, leading to food insecurity and water availability issues.
“The impact of the drought on food security and the availability of water will require a slight change in priority areas during the last half of the year,” Minister Ncube noted.
The country’s current account surplus is also projected to narrow to US$44.5 million by the end of the year, a significant decline from the surplus of US$133.9 million recorded in 2023.
The minister acknowledged the challenges posed by the drought, but expressed optimism about the country’s ability to adapt.
“Fiscal policy is being re-configured to increase usage of the local currency to sustain macroeconomic stability,” he said.
However, the slow-down in economic growth and the decline in agricultural production are significant concerns for the country’s economic prospects.
“The economy is experiencing relatively stable prices and exchange rates since the introduction of the ZiG currency, but the drought has had a negative impact on our growth prospects,” Ncube said.
For the first six months of the year, ending June, the government’s revenue in the newly introduced ZiG currency amounted to ZiG36.5 billion, while expenditures totaled an estimated ZiG38.4 billion.
This represents a spending rate of 44.2% of the overall approved budget for 2024, which has been fully converted to ZiG by the treasury.
Legislators were not granted sufficient time to deliberate on the mid-term budget review, as they were rushed to consider the document without adequate opportunity for examination.
Opposition lawmakers sought to register their dissent, but were ultimately unable to prevent the decision from being pushed through.