(File image) Zimbabwean Finance Minister Tendai Biti

Zimbabwe - Zimbabwe's Finance Minister Tendai Biti on Thursday said Zimbabwe's economy will grow by 5.0 percent next year but warned the prospects could be scuttled if elections planned for 2013 turned violent.

“We project a growth rate of 5.0 percent,” Biti said in his 2013 budget speech to parliament.

“The biggest risk remains a violent and contested election.”

Last week he revised this year's growth downwards to 4.0 percent from a projected 5.6 percent.

Next year's growth forecast is based on the assumption that the agro-based country gets good rains, the government applies policies to boost revenue collections and cut expenditure, international commodity prices continue to firm and there is continuous demand for local platinum, diamonds and gold.

Biti said a repeat of the bloody presidential run-off election of 2008 would “collapse the nascent foundation we have built over the last three years.”

Zimbabwe is expected to hold elections some time next year to choose a successor to the country's shaky power-sharing government formed by President Robert Mugabe and long-time rival Prime Minister Morgan Tsvangirai.

The coalition government helped mend the economy and avoid a tip into full-fledged conflict in the aftermath of violent elections in 2008.

But Biti did not announce how much from the $3.8 billion budget was set aside for elections.

The elections agency said it requires $104 million to organise the vote.

Zimbabwe's economy is showing signs of recovery but most companies are still operating below capacity hamstrung by unstable electricity supplies, lack of funds and high labour costs while others have pulled down the shutters or relocated to neighbouring countries.

Much anticipated foreign investment has not been forthcoming with potential investors seeking reassurance over a law which compels foreign companies to sell their majority stake to locals. - Sapa-AFP