Zimbabwe’s year-end inflation target of 4.5 percent has come under pressure from rising food prices, but the government has no current plans to revise its forecast, said Finance Minister Tendai Biti.
The economy was on track to meet the government’s “understated” target of 9.3 percent growth this year, he added.
Zimbabwe’s annualised inflation rate was below 3 percent during the second quarter of 2011 but ticked up to 3.3 percent in July, mainly due to increases in the price of basic foodstuffs, Reuters reports.
“These are worrisome developments, which if not addressed will reverse the gains made on overall microeconomic stabilisation,” Biti told a news conference in Harare.
The government would consider removing customs duties on basic foodstuffs — mostly imported from South Africa — that were reinstated in July in a move designed to promote locally manufactured goods.
Biti said local producers and retailers were abusing the policy change and unjustifiably hiking prices.
A wage rise awarded to government workers in July had exerted pressure on state revenues, he said, reiterating that Zimbabwe would record a $700 million budget deficit in 2011.
TOBACCO TO BOOST GDP
The 2011 growth goal was on track mainly due to a recovery in tobacco production and diamond revenue, the minister said.
“The projected output from tobacco is 174 million kilogrammes. We have met that. We can easily break through 200 million kilogrammes in 2012,” he said, adding government had received $50 million in diamond revenues from its share of the Marange mines in July and August.
Zimbabwe’s tobacco output peaked at 236 million kilogrammes in 2000, before the effects of President Robert Mugabe’s seizure of white-owned farms to resettle landless blacks were felt in the key agriculture sector.
Biti said the Ministry of Finance was consulting with Indigenisation and Economic Empowerment Minister Saviour Kasukuwere over his ultimatum to foreign-owned firms, including banks and miners, to submit plans on how they would transfer majority shares to locals.
Kasukuwere has given the local units of Standard Bank Group , Barclays PLC and Standard Chartered , among other foreign-owned firms, until the end of August to provide details of how they would come under local control or risk losing their operating licences.
“I have met Stanbic, Standard Chartered and Barclays banks. We have not agreed on a (local shareholding) threshold. We’re still negotiating,” Biti said.