Budget deficit will get worse – Tendai Biti

via Budget deficit will get worse – DailyNews Live by Tendai Biti  3 NOVEMBER 2013

The 2014 budget is highly anticipated  for many reasons but none other so than that it is the first post-election budget of the new regime in town.

In an era marked by shallowness and the dearth of white papers or other policy debate, the budget becomes much more than a simple resource allocation mechanism or a fiscal planning  instrument.

It becomes as much a political statement of intent as well as an economic document.

As a political document it will go a long way to show the intentions and political direction of those in office.

Will they sober up and moderate, now that they are blessed with a comfortable majority, irrespective of its illegitimate paternity. Or will it be a continuation and reconnection with the pre-GNU politics of predation.

Put differently of the many faces of Zanu PF, which face will turn up, A Mr Jekyll or a Mr Hyde. But it is as an economic document that more will be disclosed by what is said and in this case probably more by what is not said. After all, the document is a very technical instrument  which must speak to the science of textbook economics.

So it will have to have a macroeconomic framework, with all the necessary projections. What will be the underlying presumptions of that framework.

It will have to have the always competently executed blue book, with the appropriations.

Speaking of the framework,  will it be any different from the framework in the Zanu PF blue print “Zim PEST.”

If it is not, are we back to the old era of the same government with documents that are at cross talk.

In this regard, it will be hard to come up with a set of underlies that will justify a growth of more than two percent for 2014.

For many, to what extent will the document be loyal to the Zanu PF manifesto and all the zany ideas that $14 billion can be raised from this economy, through Indigenisation and disposal of public assets.

The biggest challenge in formulating this budget will be resources. In simple terms, how to finance the same.

Resources have never been in abundance. We all know that, so the task is always that of managing a tiny envelope in an ocean of high demand and huge expectations.

But what compounds matters is that revenues have been dwindling, and Zimra, through no fault of their own, cannot meet the 2013 Budget demands. So Zanu PF has no choice but to do the obvious and spend what they have. They must eat humble pie. It is called “we eat what we kill”

The economy is too small for their ambitions and they cannot easily monetise that. In the short-term, they will resort to toxic debt from all angles  and dubious corners at usurious rates of interests.

These things will come to haunt the economy sooner rather than later.

The assumption that China or South Asia will provide resources is one that will be tested and its naivety proven.

For a party that genuinely believes money grows on trees, the concept  of “eating what you kill “ will be impossible to live with. It is therefore easily foreseeable that the Zimbabwean dollar has to be brought back, to allow monetisation of the humongous obligations and election promises made.

It is just a but  question of time.

Revenue collection is another issue that will haunt the regime. It is called the revenge of history.

During the GNU, Zanu PF created parallel structures of revenue collection, chief of these being diamond revenue of course.

But there were other massive funds that despite the clear provisions of the Public Finance Act  and the Constitution, retained their collections.

The most notorious being funds under the ministry of Home Affairs, the Police Fund, and the Registrar General.

It is going to be impossible to dismantle the  toxic deep founded structures of a parallel government. So the era of fiscal haemorrhage will continue.

But while the parallel structures of revenue collection will remain unabated, the parallel unaccounted  and  off budget toxic expenditure incurred nocturnally during the GNU will be loaded to the treasury.

The amounts could run into hundreds of millions.

With accrued arrears of over $300 million, and other unbudgeted for expenditure such as the $150m Zambia maize loan scheme and the recent debt accrued in respect of the $160 million government agriculture input scheme, it is Armageddon.

One has not even factored in the issue of the 2013 bonus.

A basic arithmetic model will show the unthinkable.

That as we head towards 2013,projected net revenues for 2014, are less than accrued arrears of 2013. Put simply, there is  huge budget deficit in excess of the 2014 income.

 

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20 comments on “Budget deficit will get worse – Tendai Biti
  1. Joseph Chasura says:

    I agree wth you honourable TB. The time for politicking is over. Honourable minister Patrick Chinamasa is better placed to tell the true Zimbabwean economic story. Big headache for Treasury

  2. L. Nyati says:

    May Day, May Day, oh May Day!!!

  3. The fact the criminals keep on parroting about no return to zimdollars is proof enough to seasoned observers that the fidelity printing presses are cranking up. Any authentic economist or genuine businessman knows that only gono dollars can sustain a proliferate dysfunctional voodoo economy’s insatiable looting appetite prolifigate

  4. zim4u says:

    That goes without saying I agree with TB this is a bomb waiting to explored handiti vakati vanozvigona let them do the mess do you think they care

  5. Thembani says:

    The budget dficit is not a bad thing at all and the use of the Zim$ can actually be the best step forward with numerous benefits.The only problem is, we can not trust ZANU with monitoring the currency.Gono’s experience is still very vivid in our memories.

  6. Future More says:

    The writing is on the wall. The Rise of the Zimdollar. The message is clear, we will introduce the Zimdollar and mop up the market USD, Pula, Rand e.t.c The reason is simple, they “politicians” need foreign currency to travel, and “povo” can get by with Zim dollars. I think the best way forward is to convert all hard currency into assets or start banking in SA or Botswana. Don’t Trust These Guys At All.

  7. GBZ says:

    It is quite clear that zanupf do not have the ability, mental capacity or intelegence to run Zims fiscal, and then there is the problem that their focus is on what their personal and corrupt requirements are so we start from a negative and move backwards. Me thinks we are in serios trouble, and I have heard that zpf intend taking over all the banks and controlling all the money in the country.

  8. masvukupete says:

    Chinamasa has admitted, I qoute “Zim does not need small money, it needs big money”. To me that is an admission that they do not have a clue on how to reduce government expenditure or increase revenue inflows. They are just going to do it the sanction way, complain about no revenue whilst Harare burns. In actual effect the civil service is too bloated. The expenses are too much. The CICOTDFPOZFSOZPF (commander in Chief of the Defence forces, President of Zimbabwe, First Secretary of ZPF ) should explain to the civil servants that it is time for them to loose their jobs so that those that produce real goods can be employed so that the civil servants in turn can be employed. It is time to cut the salary bill in order to inject a lease of life into the real revenue growers. All the companies in Zimbabwe have downsized and some closed since 2003 yet the civil servants have stayed. It is now time for the civil servants to be laid off as well. Give them land as retrenchment packages so that they can at least produce something for the nations instead of loitering in government offices waiting for real workers monies (taxes).

  9. Dave says:

    I remember a saying told for the reasons companies fail. They were 3 words – Management, Management and Management! Methinks that it also applies to government

  10. Bruce says:

    Mugabe thought MDCs had a lawyer for the Minister of finance, then their Chinamasa can do as well. Poor bob, Chinamasa is clue less of the economy, neither is any one. Even you Gono is totally blind.

  11. Musa says:

    Vana Biti should keep quiet. The Electorate rejected you. Let those who were accepted by us rule. Work on sanctions then tokuteererai kuti munenyaya. Now hapana except to lick your wounds after the drubbing by ZANU Chiwororo

  12. BossMyass says:

    One of the factors retarding the development of Africa as opposed to Asia is economic corruption. This involves the awarding of tenders fraudulently to relatives and friends by those in power. Sometimes secret deals are entered into with multinational companies and in some cases bilateral agreements are signed which are skewed in favour of the investor in exchange for a kickback. Worse still, the continent continues to lose a lot of money through the illicit movement of financial capital to overseas banks.
    As earlier pointed out under nepotism, too often big tenders are unfairly awarded to the children, relatives and friends of those at the upper echelons of government. Such companies swindle the government and usually do not complete the job for which they were awarded the tender or they do a shoddy job. As a result of this economic corruption, we now have a post-colonial new class of mega rich people -the tender-preneurs whose wealth comes from the tenders they win. Similarly, the secret deals that are entered into for the exploitation of minerals such as oil, gold, diamonds, platinum, nickel, uranium, and other precious minerals directly benefit those who control the levers of power and the investors, but very little trickles down to the common person.
    Because Africa requires investment, issues of royalties, how much interest can be repatriated by the investors, beneficiation, reinvestment and environmental degradation are downplayed. And where there are policies for “localization”, “indigenization” or “nationalization”, these are mere clichés and high-sounding words which lack clarity and substance in their implementation.
    Also because there are weak government institutions in some African countries, illegal mining takes places unabated. And how much is paid by multinational companies in royalties and taxes is unclear. To understand the scale of economic corruption in some African countries, do we know the total value of each of the minerals that has been exported since it was discovered? What is the value of the remaining reserves of oil, diamond, gold, platinum, etc in your country? Is it not obvious that behind the secret activities are big sharks that gobble up the resources of the country?
    And even more disturbing is the amount of money that is secretly siphoned out of Africa by some of its leaders. The image of African dictators who have billions of dollars stashed in Swiss banks looms high in our minds. Just to give you the extent of the damage that has been done to Africa by its own people, it is estimated that between 1960 and 1999 $400 billion was stolen from the treasury of one of the West African countries by its leaders. Researchers also estimate that from 1970 to 1996, $187 billion was sent out of 30 sub-Saharan countries, which exceeds their cumulative external debt. These staggering figures suggest that Africa is largely responsible for its own under-development through unmitigated economic corruption.

  13. Dayford says:

    BossMyAss you hit the nail right on the head! We Africans are the chief culprits of the economic Mess in our respective countries..these are problems of our own making and we always want to blame it on others. Trouble is no one is accountable for their wrongdoings and hence the proliferation of corruption. African leaders will always get away with murder…never held to account..they know this and they take full advantage. At the end of the day we are the victims and the dont even know what to do with the money.

  14. BossMyass says:

    When Zanu PF came into power in 1980, the country had a low unemployment rate of 26%. For the past 33 years, Zimbabwe has had an alarming unemployment rate of over 95%. Lack of employment opportunities chased away the country’s graduates to other countries in search of better prospects. Unless they change their policies, we doubt that the prevailing conditions will change.In its manifesto, Zanu PF said it would indigenise at least 1 138 foreign-owned companies and unlock empowerment value from idle assets of proven mineral claims and others in the hands of parastatals and local authorities.

    It promised to create over one million jobs in the first year, with 348 000 jobs being in the agricultural sector alone. The manifesto said that one million jobs had already been created as a result of the land reform programme which was spearheaded by war veterans in 2000.????????????????????????????

    Since the land invasions, which saw hundreds of white-owned commercial farms invaded, Zimbabwe has not been able to adequately feed its population.In its manifesto, Zanu PF said it would indigenise (STEAL) at least 1 138 foreign-owned companies and unlock empowerment value from idle assets of proven mineral claims and others in the hands of parastatals and local authorities.

    Zanu PF has indigenised12,117,000 hectares of land which was previously in the hands of 3,500 beneficiaries of colonialism and illegal and racist Rhodesian rule and has resettled 276,600 households that have created over one million jobs that have become a source of livelihood with enormous trickle down effects on the economy’.

    It promised to create over one million jobs in the first year, with 348 000 jobs being in the agricultural sector alone. The manifesto said that one million jobs had already been created as a result of the land reform programme which was spearheaded by war veterans in 2000. OF COURSE ALL THIS LAND NOW, IS USELESS AS EXPECTED.

    Since the land invasions, which saw hundreds of white-owned commercial farms invaded, Zimbabwe has not been able to adequately feed its population.

  15. rob says:

    Buti, u are quick to point fingers at others for politiking, but fail to see your own hypocracy…….during your campaigning I scared zimbabweans into withdrawing their deposits by waving bundles of zim$ in their faces……and yet now that the economy is not your responsibility (although as a supposedly patriotic zimbabwean it should be) you are quick to state that it is indeed necessary to re-introduce our currency!!!! …….have u no shame in your hypocracy? ……i also remember your propaganda when u first took your ministerial post “he he we’ll never see the zimdollar in a hundred yrs, I will ensure that”……meanwhile u have obviuosely known another reality in your heart……do us a favour and show some sort of honour and integrity

  16. rob says:

    And worse still, do none of your worshipers that have commented above recognise this hypocracy??????……..unbelievable!

  17. James says:

    Know what, this is no longer the time for the “we liberated you” kind of politics. What’s neede now is the ” we deliver” kind of politics. So we need to see if Chinamasa and company are going to deliver and I’ll give them a gold medal. The funny thing is that most of my Zanu compatriots are suffering. They only enjoy some free beers during election time and that is enough to make them say Zanu is the messiah. The real beneficiaries of the land , etc, do not have time for all this . They are busy on the fields preparing for this and the next season.
    But how many are they? A minority! The majority is at the receiving end of these kiya kiya economic maneauvres.
    We just pray for sanity on our dear land.

  18. Chivulamapoti says:

    China-yes-massa (master)is a has-been, Biti makes him look like a snot nosed kindergarten playing with his own feces. These loooong comments above serve little purpose. We should expel the Rand, USD and install the Glorious Yuan. Then our troubles would be over. After all the Chinks (in Mugabe’s armor)have the business, industry, diamonds, land (leases) and construction, why not the currency!

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