Mar., 08 / Harare - The Zimbabwean government is introducing a 10-point National Economic Recovery Programme devised by President Robert Mugabe to "revive an economy distorted by political pressure".

It seems the government of Zimbabwe is heeding calls for economic recovery in the country to combat the severe economic challenges. A programme - which will see import duty lifted on basic foods like maize, wheat flour and cooking oil - has been adopted.

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The programme will see import duty lifted on basic foods like maize, wheat flour and cooking oil, while it will also remove duty on private imports of up to 200 litres of petrol and diesel, the state-controlled Herald reported.

State radio said the new economic recovery plan "seeks to redress an economy distorted by political pressure".

The Herald said the programme was essential to combat Zimbabwe's severe economic challenges.

'They'll run out of money in weeks'

"These have been compounded by a hostile external and internal domestic environment arising from our detractors opposed to the land and agrarian reform programme.

"Sanctions imposed on Zimbabwe have seen important sources of foreign exchange, donor funding for development projects and bank lines of credit dry up.

"If not urgently addressed, foreign currency unavailability will lead to national instability and pose a threat to national security," according to a statement from the programme.

Aside from removing import duty on basic foods and fuel, the newspaper said a ban would be imposed on the export of scrap copper and aluminium.

It went on to say interest rates would rise, but didn't say by how much.

'All this is tweaking - it addresses the symptoms but not the problems'

Import duty on music, film and video equipment would be scrapped, said the paper. Rural buses would travel only on weekdays. Economist John Robertson said: "All of this will only work while the central bank has reserves, because the Reserve Bank is going to make a thumping loss.

"They say they'll pay Z$800 to the US dollar and sell it to the government for Z$55. Everyone in the government is going to ask for money to buy a new Pajero and tickets for Disneyland. Unless they put limits on how much the government can buy, they'll run out of money in weeks."

Robertson said he believed the government would have to be limited in its purchases of foreign currency so that the central bank could pay for desperately needed fuel and power imports.

"Even then, we'll have to have further price hikes in about six weeks' time because fuel is still being sold at a massive loss. None of it makes much sense," he said.

Zimbabwe's fuel doubled in cost last week, but remains the cheapest in the region.

Robertson said even if Zimbabwe's interest rates were raised to 80 percent on borrowings, it would still be "cheap money".

"With inflation at 208 percent, that's wiping out savings, pensions and pension funds. It's doing incredible damage to everybody," he said.

Robertson warned that with winter approaching, Zimbabwe could expect power cuts as the Electricity Supply Authority had failed to pay foreign debt to South Africa and Mozambique.

"All this is tweaking - it addresses the symptoms but not the problems," he added. - Independent Foreign Service



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