ZSE Shares Tumble By 23 Percent / IMF Concerned

In February, turnover was US$47 477520, 86.

Statistics from ZSE shows that foreign investors, who have been the major driver of activity on the bourse retreated in March and bought shares worth US$8 499 416, 22 which is a third of what they bought in the previous month.

Launching the anti sanctions campaign last month, President Mugabe government should move with speed to take over foreign companies operating in Zimbabwe in retaliation to the debilitating sanction imposed on the country.

The retreat by foreign investors on the bourse paints a gloomy picture on shareholders holding shares of companies listed on ZSE.

It also means that the 20 stockbrokers have their earnings reduced since they thrive on commission on the buying and selling of shares.

ZSE saw its commission fall to US$72 749 last month from a high of US$94 955, 04 IN February.

The performance of a stock exchange is closely followed by investors to assess the health of any economy.

Analysts say the proposed foreign companies’ takeover will further harm activities on ZSE.

Meanwhile Zimbabwe’s macroeconomic outlook for 2011 remains highly uncertain against a sizeable fiscal financing gap as the country remains in debt distress, the International Monetary Fund (IMF) has said.

In a statement released after the IMF’s mission during March 16–30, 2011 to conduct the 2011 Article IV consultation discussions, Vitaliy Kramarenko, mission chief for Zimbabwe said an “inefficient composition of public expenditure, persistent financial sector vulnerabilities, and weaknesses in the business climate, including the recently announced fast track indigenisation of the mining sector, weigh heavily on growth and poverty reduction prospects”.

“If these policy challenges are addressed in a timely manner, the strong growth momentum could be sustained with a significant beneficial impact on living standards of ordinary Zimbabweans,” said Kramarenko.

The IMF chief added: “Structural reforms need to be stepped up. Alignment of indigenization and empowerment objectives with respect for private property rights and the need to attract domestic and foreign investment, more flexible labor market legislation, and improved governance, particularly in the diamond sector, would be essential to strengthen the business climate and boost economic growth. It would also be important to guard against wage increases in both in private and public sectors in excess of productivity growth to prevent an erosion of competitiveness of labor-intensive industries that are critical for employment generation and poverty reduction.”

“Zimbabwe remains in debt distress, which has been exacerbated by recent nonconcessional borrowing of the government. Significant social and developmental needs would be better addressed on a sustainable basis through grants or highly concessional financing, as onerous debt service payments could crowd out future social expenditures. A significant strengthening in policies and debt relief within a comprehensive arrears clearance framework supported by donors are essential for resolving Zimbabwe’s external payments arrears.

“IMF staff will continue to maintain a close policy dialogue and provide targeted technical assistance in the context of regular visits. Access to IMF lending resources would be subject to relevant IMF policies, including a track record of sound economic policies and a comprehensive strategy for the clearance of arrears to official creditors agreed among the government coalition partners and with official creditors.”

At the conclusion of the mission, Kramarenko, mission chief for Zimbabwe, said: “Stronger policies, a favorable external environment, and sizeable off-budget donor grants supported a nascent economic recovery and a notable improvement in the humanitarian situation during 2009-10. Real gross domestic product (GDP) grew by an estimated 6 percent in 2009 and 9 percent in 2010. However, economic growth started from a low base and was concentrated on primary commodity sectors in mining and agriculture, both of which are sensitive to exogenous shocks. The budget was heavily tilted toward increasing the government wage bill with insufficient resources being allocated to social programs and high-priority infrastructure. As a result, growth benefits did not fully trickle down to many ordinary Zimbabweans outside the public sector and the growing segments of the formal private sector; and poverty remains widespread.”