Zimbabwe to Rebase Economy After Adopting New Currency

Zimbabwe’s Finance Minister has disclosed a rebasing of the country’s economy subsequent to the adoption of a new currency earlier this year, noting a slow economic growth caused by a drought and a cyclone that hit eastern regions.

Speaking with parliament on Wednesday, Zimbabwe’s Finance Minister Mthuli Ncube explained that the economy grew higher than expected in 2018.

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 economy broadly means changing the reference points used to calculate the country’s gross domestic product. In rebasing a country’s Gross Domestic Product (GDP), means revising the methods and base data used to calculate GDP— this has become a growing trend among African countries in recent years.

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 economy had grown by 6.2 percent in 2018 compared to an initial forecast of 3.1 percent 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. $1:RTGS$3.3 (Reporting by MacDonald Dzirutwe Editing by Janet Lawrence and Frances Kerry)