Zimbabwe Budget and the Economic Crisis

Source: Zimbabwe budget unlikely to ease economic crisis - Reuters.com

Zimbabwe is planning to release its budget this week. However, analysts say that the new budget will unlikely help the economic crisis that is currently plaguing the country.

The Zimbabwean economy has shrunk 40 percent over the last six years and inflation has shot up to 1,070 percent. And it is predicted by the International Monetary Fund that it will rise to over 4,000 percent in 2007. In addition, the budget deficit, which was predicted to drop to 4.6 percent of GDP from 5 percent in 2005, is likely to be off target after the government adopted a supplementary budget in July 2006 which was three times the original 2006 budget.

Experts say that the country is doomed if it doesn’t fix certain problems. These problems include private property rights, government firms that run at a loss, and black markets in which the US dollar is selling at over six times its official value. In addition, the country is suffering from a food shortage, a high unemployment rate, and a lack of fuel and foreign currency.

Questions:

What steps should be taken to address these problems?
Are there certain problems that should be dealt with before others?