GOVERNMENT will slash recent increases in import duty on clothes and textiles following a public outcry, Finance Minister Tendai Biti has said.

Minister Biti said this yesterday while add-ressing journalists on the state of the economy.  He also revealed plans to liquidate the US$110 million International Monetary Fund Special Drawing Rights to fund key projects.

Treasury had raised duty on textiles and clothing products in the 2012 National Budget Statement.But there was an outcry after imported products became more expensive for cross border traders.

Presenting a US$4 billion 2012 National Budget Statement late last year, Minister Biti retained duty on selected imports and increased to 40 percent +US$3 (per kg) duty on textile and clothing goods from 40 percent +US$1.

The public also raised concern at the way they were allegedly being abused by Zimbabwe Revenue Authority officers enforcing the new tariffs.

But, Minister Biti said consultations will start soon with stakeholders over measures to review the tariff and announcements will be made in the next few days.

"Concerns have been raised by stakeholders over some of the tariff measures Government implemented from January 1 2012 as part of the 2012 Budget in order to support domestic production and level the playing field," he said.

The minister said duty on textiles and clothing had been increased to reduce dependence on imports.However, domestic production could not satisfy demand.

Last year, Zimbabwe declared exports amounting to US$3,67 billion compared to imports totalling US$6,2 billion.

"Clearly, this level of reliance on external savings is unsustainable, making the institution of measures supportive of growth of domestic production unavoidable.

"Treasury has therefore, embarked on the necessary measures to review some of the tariffs, measures will thereafter be instituted," said Minister Biti.

Treasury will withdraw the equivalent of US$110 million SDRs from the IMF to fund US$40 million infrastructure projects (including water and sanitation) and to provide US$30 million lines of credit to industry.

A total of US$20 million will be used to augment the US$7 million provided in the budget for the Reserve Bank's lender of last resort needs while US$20 million will add to earlier budgetary allocations to agriculture.

Minister Biti expressed hope the economy will grow by 9,3 percent projected for 2011.But he expressed concern over the situation in the banking sector regarding disruption of transactions due to liquidity challenges.

This follows the logjam on Real Time Gross Settlement transfers over the festive season, which delayed transfers of money due to liquidity constraints caused by high value and high volume transactions.

Measures have been put in place to prevent recurrence of the problems and these include limits on high value and volume transferMinister Biti assured the nation that despite the late rains, a combination of the expected harvest and provision for a 500 000 tonnes of strategic grain reserves, meant the country had enough food.