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IMF Is Wrong, Mthuli Ncube Is Right - Eddie Cross

4 years agoFri, 12 Apr 2019 15:37:29 GMT
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IMF Is Wrong, Mthuli Ncube Is Right - Eddie Cross

Former MDC legislator Eddie Cross says the International Monetary Fund (IMF) is wrong in forecasting that Zimbabwe will experience a recession in 2019.

Cross says the IMF is being too pessimistic, and Finance Minister Mthuli Ncube is right that Zimbabwe’s economy will grow bt 3 per cent. Said Cross:

I think that they (IMF) are being too pessimistic. Mthuli (Finance minister Ncube) believes that we are going to get growth of 3% and I think he is right. I do not think the fund (IMF) understands the Zimbabwean economy.

What do I agree with them is that I think we have got to recognise that what the government has done in the last year has been to shift the economy from consumer-led growth path to export-led growth and the changes in monetary policy have emphasized that.

So, the exporters are in a situation where they are in receipt of very substantial premiums on export proceeds and this is going to lead to growth, export-led growth. But, clearly, if you boosted consumer demand by boosting incomes or reducing Paye (Pay As You Earn) or whatever it would have an immediate impact on growth.

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With export-led growth, there is a time lag because what happens is that you introduce the incentives and then it takes time before they kick in and result in exports.

There is a lag between providing the incentives, assuring the exporters that the incentives are not temporary and that this is a genuine change in policy and the actual growth that will result in that.

So, I think the fund has looked at that and said ‘look you are going to shock domestic consumption’. China is doing exactly the opposite by shifting from export-led growth to domestic demand-led growth and when you make a shift like that it changes the growth pattern.

So, I think we are going to see growth, I don’t think they are right about the negative growth, but they are right in a sense that we are going to see subdued growth until the export industry can respond to the export incentives.

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