Chinamasa gears up for budget presentation

via Chinamasa gears up for budget presentation | SW Radio Africa by Tichaona Sibanda December 10, 2013

Finance Minister Patrick Chinamasa will present the 2014 budget to Parliament next week Thursday, a month later than originally planned because of the current economic downturn.

Since the elections in July this year the country has been facing many economic challenges, including shortages of cash, water and electricity and companies continue to close down.

Chinamasa recently revealed that efforts to secure financial support from the World Bank and the International Monetary Fund have been rejected, amid reports the country’s external debt now stands at $11 billion. He said the government’s appeal for debt forgiveness had also been refused by the multilateral lenders.

Many Zimbabweans will be happy to note that the Reserve Bank of Zimbabwe has assured the nation it will not be re-introducing the Zimdollar, amid rumours the state was preparing for its return.

The economy boomed after independence in 1980 but took a hit in 1997 when President Robert Mugabe gave in to pressure from war vets waging violent protests for pensions.

From 2000 the seizure of white-owned farms led to chaos in the agriculture sector and the economy shrank by half. In 2008 hyperinflation of 231 million per cent broke the national currency and left millions of people hungry. But the adoption of the US dollar and South African rand has brought a measure of stability.

Economist Luke Zunga said he doubts the national budget for this year will go beyond $US3 billion because there is simply no money in the country.

‘Considering that there is a lot of shrinkage in the tax collection system because very few people are paying income tax, I will be surprised if the government manages to raise $3 billion,’ Zunga said in our weekly Speak Out Padare program.

The unemployment rate is hovering above 90 percent although the government puts the figure at 11 percent as captured in the 2012 national population census. Zunga said people should not read too much from what he termed ‘propaganda’ information reports.

‘Basically they are playing around with figures…playing around with words. They are counting people selling in the streets as employed, because now everybody is selling something there is no real employment.

‘These people are selling gadgets and sweets at street corners and would say they’re employed, they are just playing around with words. The reality of the matter is they do not contribute to the treasury, the unemployment is so high it would probably not improve in the foreseeable future,’ the economist said.

Zunga said Chinamasa’s budget will obviously not dwell much on informal traders and will find it difficult to balance the figures as government recently promised to increase the salaries of civil servants.

This is despite the fact wages for government workers already consumes 70 percent of the budget with revenues barely growing.

‘He has got very little room to manoeuvre. I guess one area he could source funds is from the international donor community,’ Zunga added.

However, other analysts told us the government must take stronger action in fighting public corruption and improving governance, especially in the mining sector. Mystery still surrounds what happens to all the diamond money the country should have earned over the last few years.

Donors committed millions of dollars during the tenure of the unity government but have since withdrawn their support, demanding reforms first from the ZANU PF government before they can re-engage.

The country desperately needs foreign investment and donor support to create jobs and revamp the infrastructure. But the so-called indigenisation program has scared off most investors and just last week a farm, supposedly protected under an international investment agreement, was invaded and taken over.