Zimbabwe's rapid growth seen slowing to 5 pct: IMF

WASHINGTON (Reuters) - After two years of high growth Zimbabwe's economy is set to slow to 5 percent this year amid a poor farming season blamed on erratic rainfall and concerns about upcoming elections, the International Monetary Fund said on Tuesday.

Zimbabwe's economy grew at a rapid clip of 9.6 percent in 2010 and 9.4 percent last year as the country rebounded from a decade-long recession widely blamed on the policies of long-time President Robert Mugabe.

In its annual review of the Zimbabwean economy, the IMF said growth should moderate over the medium-term to average about 4 percent, although electricity supply problems and tight liquidity conditions could pose problems.

The IMF said Zimbabwe's current account deficit is projected to narrow to 20.5 percent of gross domestic product in 2012, as a spike in imports in 2011 is reversed and exports continue to expand.

The IMF said Zimbabwe carries a heavy debt burden with total external debt estimated at $10.7 billion, or 113.5 percent of GDP, at end-2011, of which 67 percent of GDP are in arrears.

"The large debt overhang remains a serious impediment to medium-term fiscal and external sustainability," the IMF said.

Two salary increases for civil servants since 2011 raised employment costs by 22 percent, and was compounded by an increase in employee allowances and unbudgeted recruitment.

With elections expected later this year or next, there are concerns about a repeat of violence that marred the 2008 presidential poll. Mugabe, 88, has held onto power since independence from Britain in 1980 and is blamed for running the economy into the ground and for massive human rights abuses.

The West has imposed sanctions on Mugabe and his allies, accusing them of election violence and using state security agents to beat up and detain opponents.

Mugabe and opposition leader Morgan Tsvangirai, who is prime minister, share power in a unity government. Mugabe's ZANU-PF party is pushing for elections this year, ahead of schedule, while Tsvangirai's Movement for Democratic Change wants new elections only after the adoption of a new constitution and electoral, security and media reforms.

Under the terms of the power-sharing deal new elections must be held by next year.

The government has turned to South Africa and Angola to help plug a $400 million hole in Zimbabwe's budget. The country has struggled to attract private investment and funding from global institutions like the IMF.

Source: http://news.yahoo.com/zimbabwes-rapid-growth-seen-slowing-5-pct-imf-054315389--finance.html

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