Economic experts and Parliamentary Budget and Finance Committee have questioned government’s insistence that the economy will grow by seven percent this year, saying it is unrealistic given the prevailing economic environment.
When experts expected downward revision of gross domestic product (GDP) growth rate during the presentation of Mid-Year Budget Review Statement on Friday, Minister of Finance, Economic Planning and Development Joseph Mwanamvekha remained firm, saying the economy will still grow by seven percent from five percent.
But in an interview on Monday, Budget and Finance Committee chairperson Sosten Gwengwe asked Treasury to be realistic in its projections to match the situation on the ground.
He said the projected growth is over-ambitious, citing economic challenges the private sector is facing such as slow business, electricity challenges and high cost of finance, among others.
On his part, Catholic University dean of social sciences Gilbert Kachamba said in an interview on Monday it is difficult to achieve seven percent growth rate this year this year as there are many issues surrounding the economy that are hindering growth.
He said: “The political impasse is contributing substantially to slow growth. Natural disasters and poor agricultural output and prices are also affecting the economy negatively.
“Our heavy reliance on agriculture will not take us to that growth rate. Something different must be done and must be done quickily.”
But Mwanamvekha is banking this year’s growth on the rebound in the agriculture sector and expected infrastructure development.
He said in the statement: “Government’s overarching objective in the 2019/2020 Budget is to leverage on the macroeconomic stability to tackle five key issues, namely economic growth, job creation, economic empowerment, sustainable debt management and infrastructure development.
“Alongside this objective, government will continue to focus on macroeconomic stability as it is a necessary condition for the attainment of inclusive, resilient and sustainable growth.”
Mwanamvekha has stuck to the projected growth rate despite the World Bank projecting that the economy will grow by 4.8 percent while the African Development Bank (AfDB) put this year’s growth rate at 5.2 percent.
The Bretton Woods institution’s projection is based on weather shocks and political instability following the disputed May 21 2019 Tripartite Elections, who presidential election results have since been nullified
The bank said steps to improve the business climate, rule of law, debt management and productivity can help achieve sustained growth. In the same vein, AfDB cited unstable trade, climate shocks, fiscal policy slippages and lower business confidence that could hurt the economy.