Government has deliberately prioritised the agriculture sector in the disbursement of funding under the $18 billion Covid-19 stimulus package to ensure food security and inclusive economic development, a senior treasury official has revealed.
Secretary for Finance and Economic Development, Mr George Guvamatanga, said this during a Reserve Bank of Zimbabwe (RBZ) 2021 monetary policy review webinar in Harare last week.
Mr Guvamatanga, who could not disclose how much was released to the agriculture sector, said the Government was now looking at how it can provide further support to other non-agriculture oriented sectors after the country achieved the critical objective of food security.
He said treasury’s focus was to continue to support other key sectors of the economy with both loan guarantees and liquidity.
Government came up with the $18 billion stimulus and recovery package last year to minimise the negative impact of the fallout from the Covid-19 pandemic, which suffocated global trade and supply chains.
Zimbabwe was projected to record a second consecutive economic recession of 6,5 percent last year due to the heavy blow from the viral global pandemic and cyclones, but is forecast to climb back with a 7,4 growth this year.
“At the moment we are . . . reviewing what we have done with the current stimulus package so that, we can come back to the market to see how we can further enhance support . . . to other sectors,” he said.
Mr Guvamatanga said there was a very good reason why Government prioritised agriculture, which is the backbone of the domestic economy and this was because forecasts projected a good rainy season.
“But now that we have managed to secure food security and are no longer going to be importing food, it allows us to support other sectors with both local currency and foreign currency that is required by industry,” said Mr Guvamatanga.
Zimbabwe’s agriculture dominates the economy and through its various establishments, the sector is one of the major employers in the country. As such, it is critical to note that agriculture is not the backbone of the economy on the basis of its contribution to the gross domestic product only, but on the basis of its position within the value chain of major sectors of the economy, particularly manufacturing through backward and forward linkages.
For instance, the manufacturing sector requires about 65 percent of its raw material from the agriculture sectors. Similarly, the service sectors such as tourism and hospitality are supported by commodities from agriculture.
The same commodities are sold in retail out lets while others such as tobacco are exported, earning the country close to US1 billion annually. On the other hand, the sector is the market for manufacturing firms.
Mr Guvamatanga said the projected 7,4 percent economic growth this year was very much achievable on account of a good farming season, recovering commodity prices and prevailing economic stability.
However, the IMF contends that how the global economy will fare over the next few months largely depends on the outcome of the race between the mutating virus and vaccines, and on the ability of countries to provide continued support until national immunity is achieved and the recovery is fully underway.
“In our latest forecast released last week, we project global growth at 5,5 percent in 2021, which reflects the positive effects of vaccinations in some countries, adaptation to containment measures, and continued policy support,” said IMF Deputy Managing Director Antoinette Sayeh At the Warwick Economic Summit early this month.