Publication: Zimbabwe Infrastructure Dialogue in Roads, Railways, Water,
Energy, and Telecommunication Sub-Sectors
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2008-06
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2012-06-14
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In the 1990s, Zimbabwe's economic growth began to slow following a balance of payments crisis and repeated droughts. By the late 1990s Zimbabwe's economy was in serious trouble driven by economic mismanagement, political violence, and the wider impact of the land reform program on food production. During 2007 Gross Domestic Product (GDP) contract by more than 6 percent, making the cumulative output decline over 35 percent since 1999. The unrelenting economic deterioration is doing long-term damage to the foundations of the Zimbabwean economy, private sector investment is virtually zero, infrastructure has deteriorated, and skilled professionals have left the country. With inflation accelerating, the Government introduced, in 2007, blanket price controls and ordered businesses to cut prices by half. Despite the strict price controls inflation continues to rise as the root cause of high inflation, monetization of the large public sector financing needs remains unaddressed. A large part of the high public sector deficit is due to quasi-fiscal spending by the central bank on mainly concessional credits and subsidized foreign exchange for priority sectors, unrealized exchange rate losses, and losses incurred by the central bank's open market operations to mop up liquidities.
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“World Bank. 2008. Zimbabwe Infrastructure Dialogue in Roads, Railways, Water,
Energy, and Telecommunication Sub-Sectors. © World Bank. http://hdl.handle.net/10986/8027 License: CC BY 3.0 IGO.”
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