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*Zimbabwe's Economy Going Towards The Graveyard - Mugano*

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Economist Gift Mugano has warned that the Zimbabwean economy is rapidly approaching a crisis similar to the one experienced in 2008 when the country’s GDP growth plummeted to -17.7% and the Zimbabwean dollar became virtually worthless.

Reacting to the Mid-Term Budget Review Statement presented to parliament on Thursday by Finance, Economic Development and Investment Promotion Minister Mthuli Ncube, Mugano stated that the Treasury boss should consider introducing a supplementary budget to address the financial shortfall caused by the depreciation of the local currency.. Wrote Mugano on X:

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*The mid-term budget review exposed economic rot*

> Forget about nice phrases from my esteemed brother [Mthuli Ncube] – consolidating stability…There is nothing to consolidate. The economy is in a dire situation. The economy going towards the graveyard. We are fast approaching 2008.

> These are the facts:

> 1. Contribution of IMTT to total revenue fell drastically from about 16% in 2019 to 3.4% in 2024 – signifying deepening informality and collapse of the formal economy;

> 2. Percentage of people employed in the informal sector increased from 75.6% in 2019 to 87.7% in December 2023 – signifying deepening informality and the collapse of the formal economy. @MthuliNcube in the NDS1 was targeting to reduce informal employment to 70% (i.e., increasing formal employment to 30%) by 2025. Right now formal employment is sitting at 11.3%;

> 3. Youth unemployment is standing at 3.5 million – 3.5 million young people are unemployed. The majority of the youths are drug addicts.

> 4. National debt has ballooned to US$20.8 billion (ZiG287.2 billion/13.78) up from US$18.73 in 2023, i.e., a staggering US$2 billion increase;

> 5. Close to 50% of the population is living in extreme poverty.

> 6. Both the education and health sectors are in intensive care units.

> 7. Close to 25% of the children under 5 are suffering from stunting growth – future generation & human capital is threatened;

> 8. Businesses executives tell me that they are failing to access forex from banks with some securing 5-10% of their forex requirement notwithstanding the assurances given by the @ReserveBankZIM

> 9. Exchange rates are running away – we hear banks are using rates averaging ZiG22.30/US$1 while parallel market rates are hovering around ZiG24/US$1.

> 10. Aggregate demand is plummeting – mari haisi kubatika or kutenderera – which is now a common statement in the market.

> Until GOZ and all stakeholders in the ecosystem of policymaking confess the truth about the state of the economy, we will sleepwalk into 2008.

> In view of the fact that the Honourable Minister of Finance didn’t table a supplementary budget, the following question is pertinent:

> Official exchange shot from ZWL6000/US$1 (i.e. at the time you presented the 2024 budget in Nov 2023) to ZWL33,882 (now equivalent to ZiG13.52) as of 5 April 2024. Resultantly, the national budget which was equivalent to +US$9 billion when it was presented (under assumption of stable exchange rates) was eroded to US$1.68 billion. Isn’t this enough reason to do a supplementary budget?

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