HARARE, Nov. 28 (Xinhua) -- Zimbabwe's economy is forecast to grow 6 percent next year, up from 2 percent this year, driven mainly by strong agriculture performance, Finance Minister Mthuli Ncube said Thursday.
Announcing the 2025 national budget in parliament, Ncube said the projected 6 percent growth rate, slightly down from the initial projection of 6.5 percent, is based on the recovery of the agriculture sector, improvements in electricity generation, and expected stability in commodity prices in the mining sector.
He said the agriculture sector is expected to recover from the El Nino-induced drought this year and grow 12.8 percent, electricity generation is expected to grow 10.6 percent, information technology by 9.9 percent, and mining by 5.6 percent.
"The anticipated La-Nina weather phenomenon, usually associated with normal to above-normal rainfall, is going to be the major driver of growth in agriculture and electricity generation," he said.
According to him, the country's economic growth beyond 2025 is projected to remain steady at 5 percent, mainly driven by private consumption and investment.
Power generation is projected to increase by 10.6 percent in 2025, anchored by the expected reliable performance of Hwange Thermal Power Station Units 7 and 8, as well as expected additional output from renewable energy by independent power producers.
Ncube, however, lamented that despite the substantial growth in electricity generation anticipated next year, a significant power deficit is expected to persist in Zimbabwe in the medium term to 2030.
Meanwhile, the finance minister expressed concern over the country's rising debt over the past few years, which he said has led to high debt servicing costs and an unsustainable fiscal position.
"This undermines investments in critical social sectors of health, education, and social protection, among others. The immediate priority is to stabilize debt service payments at sustainable levels, by renegotiating comprehensive debt restructuring with the creditors and bondholders. Failure to restructure the debt will lead to significant economic risks in 2025 and beyond, including defaulting, reduced investor confidence, liquidity crisis, and debt spiral," Ncube said.
Zimbabwe is currently saddled with 21 billion U.S. dollar debt, made up of 13 billion dollars in external debt and 8 billion dollars in domestic debt. The country is currently engaging its external creditors for debt relief and restructuring.
Ncube said debt restructuring will enable Zimbabwe to service its active debt obligations at sustainable levels as they fall due without injecting excess liquidity into the economy. ■
