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Zimbabwe’s Economy Is Resilient Despite Drought, Minister Ncube Says

By Ray Ndlovu and Jennifer Zabasajja
Mthuli Ncube, Zimbabwe's finance minister, speaks during an interview in Harare, Zimbabwe, on Thursday, Aug. 15, 2019. On the eve of major protests, which were called by the main opposition party over plunging living standards, Ncube said the country would establish a Monetary Policy Committee within a month that will cut interest rates, begin selling bonds with maturities of as long as 30 years, and proceed with a plan to privatize everything from state telecommunications companies to timber plantations. Photographer: Cynthia R Matonhodze/Bloomberg (Cynthia R Matonhodze/Bloomberg)

(Bloomberg) -- Zimbabwe‘s economic fortunes are looking up, despite the nation having to contend with a crippling drought and being shunned by capital markets since a 1999 debt default, Finance Minister Mthuli Ncube said.  

“We’ve learned to manage our affairs properly” and are “living within our means and it’s showing,” he told Bloomberg TV in an interview in Johannesburg on Thursday. “The economy is set to grow 2% and is showing lots of resilience even with the worst drought in 40 years.” 

This year’s anticipated expansion contrasts with a 7% contraction in 2019, when the southern African nation also confronted a dry spell. A budget deficit of 1.4% of gross domestic product is expected by year-end, which Ncube said is among the lowest it has posted. 

“We have a current-account surplus for the sixth-year running which means the external balances are not a risk to the currency and the fundamentals,” the minister said.

Zimbabwe, alongside neighboring Zambia and Malawi were among the worst affected by an El Niño-induced drought that led to widespread crop failures across southern Africa. 

About three-quarters of Zimbabwe’s output of corn, which is mainly grown by subsistence farmers who are reliant on rainfall, was wiped out, according to Ncube. Other cereal crops that are mainly grown by commercial farmers who irrigate their fields weren’t as badly affected, with a bumper wheat harvest expected this year, he said. 

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“We’re going to be self-sufficient for wheat,” Ncube said. “We produced almost 600,000 metric tons of wheat and will be exporting it.”

As part of its drought-mitigation strategy, the country plans to expand the number of areas that will be covered under an agricultural insurance program in 2025. 

Earlier this year, the African Union’s climate insurance agency paid $32 million to Zimbabwe as part of a $60 million payout to drought-ravaged countries in the region.

Other Interview Highlights:

  • The nation’s bullion-backed currency, which debuted in April, is expected to remain stable and become the sole currency “one day,” when “the time is right,” Ncube said. “We have a roadmap for that.”
  • A  Nov. 25 debt-restructuring meeting will advance talks on how $21 billion owed to international creditors will be dealt with.
  • Talks with the International Monetary Fund for a staff-monitored program will take place next year. Zimbabwe needs the program for it to be able to revamp its debt that’s an “albatross on the economy,” Ncube said.

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--With assistance from Antony Sguazzin.

©2024 Bloomberg L.P.