Zimbabwe faces uphill task normalising donor relations

Subject

Zimbabwe economic outlook.

Significance

On November 26 Finance Minister Patrick Chinamasa presented the 2016 budget articulating the government's IMF-backed plan to clear the backlog of external debt arrears to international creditors. The aim is to normalise relations with Western donors after 15 years of isolation. The government faces a deepening employment crisis, an unfunded development plan and deflationary risks.

Impacts

• The Labour Amendment Bill adopted in August will raise labour costs and discourage job creation.
• Some deals signed during Xi's visit such as funding for fibre optic broadband may improve long-term competitiveness.
• However, others such as an agreement for a new Chinese-built parliament will add to the debt load.