via Biti breathes fire – DailyNews Live by Kudzai Chawafambira 24 JANUARY 2014
Zimbabwe remains caught up in a crisis that is weighing down heavily on economic turnaround efforts, former Finance minister Tendai Biti has said.
Out of the $4 billion national budget presented last month, Finance minister Patrick Chinamasa indicated that $3,5 billion would go towards recurrent expenditure, crowding out industry and other key economic sectors.
The budget has largely failed to inspire confidence and Chinamasa admitted it was policy-based and grossly short on funding.
“There is no doubt that our country is mired in a crisis,” Biti told the National Assembly yesterday.
“There is a crisis of expectation and confidence. Out there, our people expect government to do at least something. As we speak right now there are around 2,3 million people that have to be fed, so the crisis of expectation is huge.”
The Harare East legislator, who is the opposition MDC shadow minister of finance, said there was doubt that those in control have the solutions and can address the fundamental problems that are confronting the country.
“When a country is mired in the kind of political and socio-economic problems that is affecting our country, it’s important for the country to provide leadership,” he said.
The former Finance minister noted that there were a number of structural binds that include lack of capital, deindustrialisation and a huge debt overhang among other constraints that were hindering economic recovery.
“This country requires capital in the form of foreign direct investment (FDI),” Biti said.
“It requires capital in the form of overseas development assistance. The majority of the industrial sectors across Zimbabwe have become ghost industries.
We cannot celebrate the birth of what he (Chinamasa) described as a new economy. We cannot celebrate the return to the existence of subsistence industry which occurred before the industrial revolution.”
Biti noted the country was not producing enough as most products available in retail outlets were imports and that the country was still mired in debt.
“We have suddenly become a large supermarket for a well functioning economy like South Africa,” he said.
“Moreover, we have decayed infrastructure. The country is suffering from a debt overhang.
There is a total ignorance of amounts owed to parastatals and other non-governmental organisations.
Therefore the correct figure of debt that Zimbabwe is facing is around $10,1 billion.”
This comes as Chinamasa acknowledged that the country was saddled with a high debt overhang resulting in limited and highly priced lines of credit.