But analysts cast doubt on the forecasts saying the minister had not offered any concrete steps to halt an economic collapse, which has fanned tension.

The government has in the past missed its targets by wide margins, but presenting his annual budget Murerwa said the government believed its worst days were behind it.

"We are beginning to see a slow economic recovery.

Next year the economy is projected to grow by 0,5-1,0 per cent against the anticipated good weather, high mineral demand and improved tourism arrivals," Murerwa said in a speech to parliament.

Economists say Zimbabwe's economy has shrunk in real terms for the past six years.

Murerwa said inflation, now the highest in the world at 1 070,2 per cent and dubbed enemy number one by President Robert Mugabe's government, would retreat to between 350-400 per cent by next September.

Others, including the International Monetary Fund (IMF), expect it to accelerate further.

Murerwa said agriculture, initially expected to record 23 per cent growth this year, would now grow by 6,4 per cent due to low output of maize and wheat, the country's two main staple crops.

He said output would be better next year.

He said the mining sector, now the top foreign currency earner, would grow by 4,9 per cent next year.

"The targets are a very big ask.

Much depends on the availability of key inputs for agriculture and other sectors such as fuel and energy (electricity)," said David Mupamhadze, chief economist at ZABG Bank.

Analysts said heavy state policing of the economy, which Murerwa indicated would continue through price controls, would worsen a crisis marked by hyperinflation, shortages of food, fuel and foreign currency and a jobless rate of 80 per cent.

The crisis has been worsened by foreign donor funding drying up over policy differences such as Mugabe's seizure of white-owned farms for blacks.

Murerwa said Zimbabwe's efforts to clear external arrears of US$2,2 billion were hamstrung by shortages of foreign exchange he blamed on sanctions by Western governments opposed to Harare's controversial land reforms.

Zimbabwe had a total foreign debt of US$4,1 billion, he said.

The finance minister promised to end quasi-fiscal spending by the central bank, which totalled Z$304 billion, an IMF recommendation meant to arrest money supply growth and inflation.

Murerwa said exporters, who have become key in generating foreign currency, were hurting from an uncompetitive exchange rate, but that Reserve Bank of Zimbabwe governor Gideon Gono would announce a new exchange rate policy on Thursday.

Nampa-Reuters

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