http://www.zimonline.co.za by Charles Tembo Wednesday 02 December 2009 HARARE – Zimbabwe’s economy will grow by 4.7 percent this year with growth expected to quicken to 7 percent in 2010, Finance Minister Tendai Biti said on Wednesday. The battered economy that had been in free fall since 2000 and only stabilised following formation of a power-sharing government by President Robert Mugabe and Prime Minister Morgan Tsvangirai 10 months ago had initially been projected to grow by 3.7 percent in 2009. Presenting a US$2.25 billion budget to Parliament – the coalition government’s first full budget – Biti said: "In 2010 we are working on the assumption that the GDP will grow by 7 percent.” Summing up the guiding principle behind his budget Biti, who is secretary general of Tsvangirai’s MDC-T party, said he hoped to transform the crisis-sapped country into a “vibrant, democratic, prosperous and functional nation underpinned by the values of social justice and equality.” The Finance Minister said the economy which was originally set to grow by 3.7 percent would grow by 4.7 percent in 2009, compared to a negative 10 percent in 2008 and attributed the better-than-expected performance of the economy to improved performance in the mainstay agricultural sector which grow by 10 percent this year. The agricultural sector had previously declined by a cumulative -85.7 percent since 2002, owing to a devastating combination of erratic weather and Mugabe’s chaotic land reforms that destabilised the key sector. Biti said mining was expected to grow by two percent this year and 40 percent in 2010 compared to a decline of -22.1 percent in 2008. Manufacturing is expected to grow by eight percent in 2009, following cumulative decline of -91.1 percent. Turning to agriculture, Biti said the government was expecting more than 1.5 million hectares to be put under maize, wheat and other staple grains in the 2010/2011 season. The tobacco target for 2010/2011 is set at 75 000 hectares with a potential yield of 200 million kilograms of the crop that is a major foreign currency earner. Biti said to achieve the projected yields about US$600 million was required in funding for growers which he said would be raised from the private sector. For the 2009/2010 season which is underway, Biti said the government was looking to: “assist one million vulnerable rural households with crop input packs comprising 10 kg maize/sorghum seed, 100kgs compound D and 100kgs ammonium nitrate. Vulnerable small farmers will be assisted to the tune of US$95.3 million.” Biti, who announced a raft of tax cuts to stimulate consumer spending and lighten the tax burden on corporates, said the budget would be jointly financed from revenue raised by the government and donors. The Finance Minister projected government revenue at US$1.444 billion and said the balance would be raised from donors and other funders. As part of measures to increase public spending, the minister reduced tax for workers, with the tax-free threshold now pegged at US$160. He introduced a bonus tax-free threshold of US$400 with effect from November. Zimbabweans importing vehicles would be paying less in duty. With effect from 1 January next year, import duty for half tonne pick up trucks will drop to 25 percent from 40 percent. Vehicles with an engine capacity below 1 500cc will also attract duty of 25 percent, down from 40 percent, a welcome reprieve for car buyers in a country where the motor industry is yet to recover after more than a decade in comatose. Biti slashed corporate tax by five percentage points to 25 percent and as a further incentive to potential investors reduced transaction levies on the Zimbabwe Stock Exchange (ZSE) to 3.21 percent from 7.5 percent. To ensure a sustainable availability of basic commodities at a time when local manufacturing companies are still struggling to meet demand, Biti extended suspension of customs duty on basic commodities to 31 July 2010. – Other posts:
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