The World Bank (WB) has revised upwards the growth projections by 0.5 percent to 2.8 percent on the back of a good agricultural season.
The global financial institution projected a growth of 2.3 percent for this year and in its latest report, the growth rate has been revised upwards to 2.8 percent on the back of a good agricultural season.
The nation is expecting to harvest more than two million tonnes of grains credited to the Command Agriculture initiative and the Presidential Well-Wishers Inputs Scheme which assisted communal farmers across the country, coupled with good rains.
According to the World Bank’s latest report released this Wednesday, growth rate remained positive in 2016 at 0.7 percent and is set to rebound to 2.8 percent in 2017 though cash shortages are projected to depress the country’s medium-term growth prospect as they limit investment for an ongoing structural transformation.
The institution also highlighted that growth rates for 2018 to 2019 will be revised down to less than 1 percent.
The report also notes that fiscal imbalances lie at the core of the country’s ongoing financial challenges with fiscal deficit at 10 percent of the gross domestic product in 2016 from 2.5 percent in 2015.
On state enterprises, the World Bank Report states that they drive investment and job creation in key sectors, provide vital public services, and implement public policies though state enterprises are a major source of fiscal risk.
Most state enterprises operate at a loss and require public subsidies to remain solvent and some have accumulated significant tax arrears.
The report said the sector is a net drain on public finances.
The World Bank recommends local authorities to establish systems to manage spending better, control deficits and debt levels, improve revenue collection, and rationalise their wage bills in order to ensure that adequate resources are available for operations and maintenance.
The 2.8 percent growth rate projection by the World Bank remains high compared to the 1.7 percent projected by fiscal authorities.