INTRODUCTION

1. As part of its obligation to restore economic stability and growth in Zimbabwe, the Inclusive Government, through wide stakeholder consultations came up with the present Short Term Emergency Recovery Programme (STERP).

2. The Short Term Emergency Recovery Programme is a Capacity Based Stabilisation Programme, focusing on among other priority areas to increase capacity utilisation in all productive sectors of the economy and supported by:

· Liberalisation measures;
· Democratisation of the economy;
· Infrastructure rehabilitation and improved delivery of services by public utilities;

PROGRESS TO DATE

3.To date, key achievements under STERP are as follows:

Confidence Building

·Creation of confidence as a result of the liberalisation and decontrol measures which removed distortions in the economy.

Removal of Distortions

· Removal of surrender requirements and the return of respective functions to relevant Ministries;
· Removal of price controls;
· Removal of quasi fiscal operations;
· Charging of economic tariffs by Government Departments, Public Enterprises, and Local Authorities;
· Removal of subsidies for those not vulnerable especially in agriculture, public utilities.

Macro-economic Stability

· Introduction of a Cash Budget and review of the 2009 Budget consistent with reality. Government has to leave within its means policy;
· Adoption of multiple currencies and subsequent macro-economic stabilisation;
· Reforms at the RBZ;

Relaxation of Exchange Controls

· Restoration of Foreign Currency Accounts (FCAs) with full retention and management of these accounts by the banks;
· Dispensation to gold producers to freely sell their gold and get full proceeds net of processing and other costs;
· Removal of the policy of licensing businesses to sell goods and services in foreign exchange.  The licensing requirements and processes were neither a revenue raising measure, but were imposing additional costs on business operations, thereby making goods and services expensive.

Improved Economic Performance

· Marked improvement in the supply of goods and services;
· Sharp reduction in inflation:

Month                                    Inflation Rate
January                                      -2.3
February                                    -3.2
March                                        -3.0
April                                          -1.1
May                                          -1.0

External Support

· Engagement with the Regional and International Community for support, through humanitarian assistance and lines of credit for the productive sectors.

WAY FORWARD

4. Key to attaining sustainable economic recovery would be improving production which gives scope for improved supply of goods and services, improved incomes, and, hence, putting the economy on a sound growth path.

5. It is, therefore, critical that productive sectors attain over 60% capacity utilisation as outlined in STERP in order to facilitate economic recovery.

6. The key driver of economic growth and recovery is agriculture, given its central role in the economy.

Agriculture

7. In the medium to long term, it will be essential and critical that agriculture be prioritised given its linkages with the other sectors in the economy and its importance in guaranteeing food security and self reliance.

8. In this regard, it is essential that we address the land issue and productivity in agriculture, consistent with the Global Political Agreement, through the following measures:

· Comprehensive transparent and non partisan land audit;
· Guaranteeing security of tenure through among other instruments, lease hold title, land permits and private financing of agriculture as recognised in the GPA;
· Ensuring the viability of farming through deregulating the marketing and pricing of commodities by allowing farmers to sell freely their commodities in the open market at market determined prices;
· Abolishing the practice of announcing pre and post planting producer prices;
· Removing the GMB monopoly as a grain purchaser.  The GMB will, however, remain the purchaser of last resort.
· Promoting private sector participation and contract farming in the financing of agriculture.

Preparations for the 2009/10 Cropping Season and Beyond

9. Government will maintain and further deepen the current market liberalisation strategy in agriculture embraced during the beginning of 2009.

10. The benefits of the liberalisation measures were more evident in this year’s tobacco marketing season, where farmers were paid full proceeds of their output in foreign currency without any prejudice through the exchange rate or surrender requirements.

11. I am informed that as at mid June 2009, more than 26.9 million kgs of flue cured tobacco had been sold through the auction floors and other individual sales realising US$77.4 million.  A total of 42 million kgs amounting to US$130 million are expected to be delivered before end of the season.

12. As a result of the above, the viability of tobacco farming was guaranteed and this has enhanced their capacity for increased tobacco production in the coming year.

13. Furthermore, viable prices have contributed to increased aggregate demand thereby stimulating other sectors of the economy.

14. I am, therefore, confident that tobacco production is set to increase in the coming years benefiting from the deepening of the current liberalisation and decontrol measures.

15. The above farmer empowerment reforms will be complemented by on going efforts on mobilising external lines of credit, which will be channelled to farmers through the banking sector.

16. Hence, this strategy will not only address challenges on financing agriculture but also meet challenges of the banking sector which is currently facing a liquidity crunch.

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