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Published: Wednesday February 5, 2014 MYT 9:50:02 PM
Updated: Wednesday February 5, 2014 MYT 9:51:04 PM

Cash-strapped Zimbabwe needs $27 billion to fund revival - official

Zimbabweans collect food aid from a distribution point in Mutawatawa, about 220km northeast of the capital Harare, November 25, 2013. REUTERS/Philimon Bulawayo

Zimbabweans collect food aid from a distribution point in Mutawatawa, about 220km northeast of the capital Harare, November 25, 2013. REUTERS/Philimon Bulawayo

HARARE (Reuters) - Zimbabwe requires $27 billion (16 billion pounds) - more than twice the size of its economy - to fund a five-year plan to improve basic services and rebuild the impoverished country, a senior government official said on Wednesday.

President Robert Mugabe's government wants to invest in food security, social services and infrastructure, to reduce poverty and expand the economy an average of 7.1 percent a year by 2018.

But the ambitious plan, known as ZimAsset, requires massive capital, in a country shunned by Western governments and funding institutions such as the World Bank, because Harare has already failed to repay billions of dollars of debt.

Zimbabwe forecasts an optimistic growth rate of 6.4 percent this year from 3.4 percent in 2013, but analysts say the economy has lost steam, hit by a dollar crunch, company closures and electricity shortages.

"The quantum of the resources needed to fund ZimAsset is estimated at over $27 billion, with the bulk of it earmarked for energy, water, sanitation and social sectors," Jonah Mushayi, the acting director for fiscal policy in the Ministry of Finance, told an industry meeting.

Zimbabwe's gross domestic product totalled $11.6 billion in 2013, according to government statistics.

Mushayi said the government planned to issue diaspora bonds to tap the nearly 3 million Zimbabweans living abroad but gave no details. Remittances from the Zimbabweans living outside the country amounted to about $1.8 billion in 2013.

Harare would also set up special economic zones, which would give tax incentives to foreign investors, and seek funding from the BRICS bloc of countries - Brazil, Russia, India, China and South Africa, Mushayi said.

ZimAsset, or the Zimbabwe Agenda for Sustainable Socio-Economic Transformation, was launched in October 2013 and is due to run until December 2018.

(Reporting by MacDonald Dzirutwe; editing by David Dolan, Larry King)

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