HARARE, June 21, 2017—Fiscal imbalances lie at the core of Zimbabwe’s ongoing financial crisis: the central government’s fiscal cash deficit moved to 10% of GDP in 2016, up from 2.3% the previous year. The deficit was largely financed from domestic financial markets as external arrears prevented Zimbabwe from gaining access to international capital markets. Cash shortages followed, financing for imports dried up, and the current account deficit narrowed dramatically. The fiscal expansion in 2015/16 boosted short-term growth but depleted resources to support long-term development. Growth remained positive in 2016 at 0.7% and is set to rebound to 2.8% in 2017. However, cash shortages are projected to depress Zimbabwe’s medium-term growth prospects as they limit investment for an ongoing structural transformation. Growth rates for 2018/19 are being revised down to less than 1 percent, sharply negative in per capita income terms.
from World Bank Search – NEWS http://ift.tt/2tMOEmu