EDITORIAL COMMENT: Prodigal government fritters away future

EDITORIAL COMMENT: Prodigal government fritters away future

Source: EDITORIAL COMMENT: Prodigal government fritters away future | The Financial Gazette July 20, 2017

AGAINST significant odds, the Zimbabwe Revenue Authority (Zimra) is on course to meet, and even surpass, its 2017 revenue target.

But Zimra’s valiant efforts might not count for much, what with government’s propensity to overspend.

Deficits are not peculiar to Zimbabwe, nor are they, in themselves, entirely undesirable. Zimbabwe’s regional peers routinely run up budget deficits, but they largely stay within stated limits.
Zimbabwe, on the other hand, has shown wanton indiscipline.

Setting out to spend $150 million above budget in 2016, President Robert Mugabe’s government overspent $1,4 billion and is well on course to exceed the $400 million forecast deficit for the current fiscal year.

In revenue terms, Zimbabwe’s $3,4 billion target is not that far behind the likes of Zambia ($4,8 billion), Botswana ($5,7 billion) and Tanzania ($8 billion).

Even oil-rich continental giant, Nigeria with 32 times Zimbabwe’s gross domestic product (GDP ) and 13 times its population, is in sight, collecting roughly $11 billion revenue annually.
Zimbabwe’s revenue is ahead of Mozambique’s $2,5 billion and Rwanda’s $1,42 billion.
Zimbabwe’s unrestrained expenditure, however, sets it apart.
Its wage bill, for instance, is more or less the same as Tanzania’s.

Yet the east African country has four times Zimbabwe’s population with an economy three times bigger.
Zimbabwe, which includes grain purchases when calculating its capital budget, spends more than 70 percent of its budget on wages, including half a billion annually on pensions.

Another half a billion is gobbled up by salary transfers to grant aided institutions.
Zambia, in contrast, will this year spend nearly a billion dollars on roads, water and sanitation as well as medical and educational infrastructure.

Tanzania spends close to 40 percent of its total revenue on development expenditure.
Rwanda, with its 12 million population and estimated $8 billion GDP, has a similar profile to Zimbabwe.
Close to 45 percent of its $2,6 billion budget in 2017 -— an election year -— will go towards its development budget.

This will fund export promotion, agriculture, the State-owned Rwandair’s expansion as well as the construction of a new airport and renovation of existing ones.
Funds have also been committed towards roads, power transmission lines and water supply.
Zimbabwe’s capital budget for 2017 is 13 percent of the total.

Government typically falls short of this modest target, but regularly exceeds the budget for employment costs and foreign travel.

Between January and March this year, government overshot its foreign travel budget for the quarter, spending $13 million against the budgeted $5,2 million.
Last year, foreign travel expenses reached $53 million, more than double the budgeted $23 million.
The net effect of all this is that countries around us are investing in infrastructure and motoring ahead of Zimbabwe in terms of economic competitiveness.

Yet government seems intent on frittering away the future and leaving generations to come saddled with nothing but debt.

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