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Zimbabwe set to rebase economy after adopting a new currency

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Zimbabwe Economy

Zimbabwe’s Finance Minister announced the rebasing of the economy on Wednesday, following the adoption of a new currency earlier this year, and said growth would be slowed this year by a drought and a cyclone that hit eastern regions.

The Zimbabwe economy grew higher than expected in 2018, Finance Minister Mthuli Ncube told parliament.

The central bank scrapped the peg between its quasi-currency bond note and electronic dollars against the U.S dollar in February and merged them into a single transitional currency called the RTGS dollar.

Rebasing the Zimbabwe economy broadly means changing the reference points used to calculate the country’s gross domestic product.

The southern African nation rebased its economy last October boosting it by 40% to $25.8 billion and Ncube said the adoption of the RTGS$ required another rebasing exercise, which put the economy at RTGS$70.1 billion or $21 billion at the official exchange rate.

Ncube said the Zimbabwe economy had grown by 6.2 per cent in 2018 compared to an initial forecast of 3.1 per cent but he saw growth being throttled this year by “severe economic shocks”, including a drought that has wilted crops and a cyclone that hit western parts of Zimbabwe in March.

He said Zimbabwe had 876 000 tonnes of maize in strategic grain reserves, enough to feed the country for seven months.

Ncube said the national treasury’s austerity measures had meant a budget surplus of RTGS$443 million was recorded in the first quarter and added that the target of a budget deficit of 5% of GDP would be achieved this year. Reuters

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BUSINESS

Eskom Begins 400MW Power Supply to Zimbabwe

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Fortune Chasi

ZESA Holdings has reportedly started receiving 400 Megawatts of electricity from South Africa power utility, ESKOM.

This comes after the latter accepted Zimbabwe’s payment plan which involves payment of US$890,000 per week to settle its long-standing debt with ESKOM.

Zimbabwe is currently generating about 692 megawatts against a daily peak demand of about 1 600MW to 2000MW in winter.
All sectors were projecting fewer revenues this year as a result of the crippling load-shedding which ZESA had implemented due to the power deficit in the country.

Some companies were contemplating closing some of their branches with OK Zimbabwe, one of the biggest retailers in the country, having already closed one of its shops in Rusape.

The main power generator in the country, Kariba South Hydropower plant, has reportedly been immensely affected by the shrinking water levels at the dam whilst Hwange thermal power is underperforming due to ageing equipment.

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President Mnangagwa fires Prisca Mupfumira

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Prisca Mupfumira fired

President Emmerson Mnangagwa fired Tourism Minister Prisca Mupfumira on Thursday, a statement from Zimbabwe’s presidency said, after she was detained over the disappearance of millions of dollars during her time as welfare minister.

Prisca Mupfumira is facing seven corruption charges linked to $94 million missing from the country’s pension fund.

She was “removed … from the office of a cabinet minister and minister of government with immediate effect”, the statement said, without giving further details.

Mupfumira was arrested by the Zimbabwe Anti-Corruption Commission in July, becoming the first sitting minister of the ruling Zanu-PF party to be jailed for graft under Mnangagwa’s new administration.

Mupfumira was sacked as social welfare minister by ex-president Robert Mugabe weeks before a military-led coup that toppled the long-time ruler in November 2017.

After the putsch, she was re-appointed with a new portfolio.

Mnangagwa has identified endemic corruption as a major contributor to the country’s economic woes and vowed to root it out.AFP

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More than 2 million Zimbabweans on the brink of starvation – UN

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Zimbabwe Food Crisis

More than two million Zimbabweans are on the cusp of “starvation”, the United Nations food agency has said, launching a $331.5m aid appeal to help the southern African country recover from a devastating drought.

David Beasley, executive director of the World Food Programme (WFP), said on Tuesday that 2.3 million people in rural Zimbabwe were in “crisis emergency mode” and need food aid now.

“We are talking about people who truly are marching towards starvation if we are not here to help them,” Beasley said. “We are facing a drought unlike any that we have seen in a long time.”

The El Nino-induced drought cut the maize harvest by half, and President Emmerson Mnangagwa has declared it a national disaster.

The drought comes with Zimbabweans enduring the worst economic crisis in a decade – prices of staples such as sugar, cooking oil and rice have more than doubled since June, jacking up inflation to more than 175%.

Beasley said those in need of emergency food aid in rural Zimbabwe would increase to 5.5 million by next year.

The government estimates another 2.2 million people in urban areas also require food aid, bringing the total to 7.7 million, more than half of the country’s population.

The $331.5m would be used for food aid, provision of water and sanitation and cash handouts to stricken families.

In addition to food shortages, the appeal also targeted the humanitarian needs of victims of Cyclone Idai which tore through parts of eastern Zimbabwe earlier this year.

The cyclone, which also affected parts of Malawi and Mozambique, affected 570 000 Zimbabweans and displaced some 50 000 of them.

Mnangagwa, in a tweet on Wednesday, called for urgent action from the international community to help Zimbabwe deal with “the devastating Cyclone Idai and an El Nino induced drought”.

Emmerson Mnangagwa took over from longtime leader, Robert Mugabe, following a military coup in November 2017.

He won disputed elections last year, pledging to revive the struggling economy, create jobs, attract foreign investment and turn the country into a middle-income economy by 2030. But he has struggled to deliver on economic promises or usher in meaningful political reforms.

Zimbabwe is also experiencing its worst power cuts in three years, partly because the drought has reduced water levels at the country’s biggest hydro plant, Kariba.

Amid rising discontent, the main opposition party said it was planning street demonstrations next week to protest against the government’s handling of the economy.

Al Jazeera

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