“early” Reactions to the 2014 budget

via Reactions to the 2104 budget | The Source  December 19, 2013 

Tendai Biti – Former finance minister and MDC-T secretary-general
The projected GDP growth rate for 2014 is unrealistic. The underlying projections that the economy will grow are false and fictitious.
The country is starved of capital hence the modest budget of $4 billion. The budget should have encouraged private capital to flow into Zimbabwe. There is no explanation how the budget is going to be funded given the fact that we already have a $130 million deficit on the 2013 budget as of the 30th of October.
It’s a fictional budget because it is going to be unfunded and that is very regrettable. The aspect of it being viciously anti-poor, trying to tax musicians, capital gains on high density suburbs on cessions is a disaster, it doesn’t work. It’s a clueless budget, celebrating mediocrity. You can’t say you now have a new economy that is informalised and celebrate that.
The $100 million he hopes to get for the informal sector should have gone to the formal sector to prevent deindustrialisation and unemployment in Zimbabwe. Taxing mobile phone transfers are all anti-poor and they are going to hit the poor very hard. The measure to recapitalise RBZ is fiction. In this economy, no one is going to give you $150 million to capitalise the Bank.
We tried it, it didn’t work. The lender of last resort to be meaningful in Zimbabwe given our liquidity challenges has to be a $1 billion dollars, so $100 million is a drop in the ocean.
Demonetisation will give people $2 to $3 and it doesn’t work, I tried it -  as long as you don’t have at least $50 billion.
SMP (the IMF’s staff monitored programme) – The challenge is that there are standards and undertakings you have to meet and you have to balance the book, he has just passed a budget that is unfunded. The SMP will fall by the  wayside because we are going to fail to meet the obligations under the SMP.

Simbaneuta Mudarikwa – ZANU-PF MP, Uzumba – Minister of State for provincial affairs, Mash East
It is a people oriented budget. It has the element of ZimAsset. Money to artisanal miners has never happened in the budget and it’s a positive development . Everybody is now a master of his own destiny supported by the government.

Eddie Cross – MDC-T MP, Bulawayo South
He  (Chinamasa) was being ambitious particularly on the agriculture side, the targets will not be achieved. I think he has not done any serious damage to the economy. What he has set out today we can achieve but he still needs to do more on the investment side, property rights – security of investments and indigenisation. Nobody will invest here if the government demands 51 percent, they will have to make concessions on that front. His move on the banking sector has been extremely important. Our immediate crisis is in the banking sector, we have six banks that are technically insolvent and another three banks which are in serious trouble, some of them big banks. His moves today will stabilise the banking sector and restore some confidence. Budget to interbank market and RBZ – It’s not enough but it’s a big step forward. It’s the most he could do, he is not fleshed with money. What he has done is very important.

Supa Mandiwanzira  Deputy Information Minister and MP for Nyanga North
It is cyclical that global prices go up and down and it is not envisaged that prices (global) will remain low. The budget is encouraging Zimbabweans to utilise their own resources and to beneficiate them. Under the current circumstances, under sanctions it is a very realistic budget. It is outlining incentives for those  who want to go into manufacturing and can benefit from duty exemptions on capital goods. Taxes- the purpose of every budget is to introduce new taxes, there is nothing unusual about it. You must also understand the minister took off a lot of taxes and introduced a few new ones. The expectation is that they (Zimra on collection of new taxes) may not be able to get all in one year, but certain revenues will be accruing to the treasury.

Ritesh Anand of Invictus Capital
Against the backdrop of a sharp decline in economic activity and tight liquidity, it is quite a progressive budget. It is also targeted at the mining sector and SMEs  but is weak on how to resuscitate industry and financial services. The $100m interbank facility is welcome but may not be enough and can be absorbed quickly in the tight liquidity situation. It’s a positive step but the question is always how far can that go. About the government assuming the RBZ debt, what does that actually mean, are the companies owed better or worse off because they are just moving from one line to the next. Overall, the budget is based on grassroots economics, but does not go far enough to restore investor confidence as it has no way forward to revive industry.

Clement Muguri, Gweru resident
Chinamasa’s proposal to securitise the country’s mineral wealth might be a move aimed at raising funds for treasury, I don’t think it is the ultimate solution to problems that our economy is facing. I’m a bit worried here because it seems like we are mortgaging our mineral resources. I think the minister should have outlined proper policies that attract foreign direct investment which is what’s lacking in the country. There are big players waiting on the sidelines and this could be a missed opportunity which the minister could have used to fine-tune our empowerment laws so that they do not intimidate potential investors. Unless we address utility challenges such as electricity and water as well as challenges to do with lines of credit our local industry will not grow.

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15 comments on ““early” Reactions to the 2014 budget
  1. fortunate musindo says:

    In an nutshell the budget will go a long way in boosting some bit of confidence in the market and the restoration of stability in the financial sector which is what is actually needed at the moment taking into consideration the liquidity challenges the country is facing. The declaration by the minister on the use of multi currency system to me is key as there was a lot of anxiety as to which direction the government would take.The resuscitation of the interbank system is a step forward although funds involved could be swallowed up quickly due to liquidity contains. Am not very sure about the $200m RBZ recapitalisation and the transfer of $1.35bn to the government. On the indeginisation front I think that this is mistimed we should have done this long ago.At the moment we need FDI and we will not succeed with such Policies.
    Overally,the minister has played his part, I think we need to put hands together in support.

  2. mambo says:

    This Govt is BUST, BROKE, CAPUT. Choose whatever word you like. Utter drivel and lies from this tired lawyer turned Finance Minister, Chinamasa. Pointless and meaningless. ‘O’ level economics students have a better grasp of economics and what has to be done to save this country. Begin with an increase of VAT to 22,5% to tax the informal sector and use this money to provide a secure power supply for industry to kick start production. The “declaration” on the multi currency system with absolutely nothing to back it is no more but smoke and mirrors. The ZW$ will be back in the new year based on this.

  3. Canuck says:

    Fortunate is out to lunch and Mambo has it right…….nothing short of massive re-org of the revenue/tax/indig formula is going to bring money into the country and get things rolling……this budget is nothing but hopes and dreams…..

  4. Proof even if it’s needed that 2014 gonna be the new old 2008. Hold onto your balls.

  5. Joromiya says:

    A single Australian bank makes a net profit much more than this so-called national budget in ONLY 6 months!!! I leave the rest to your imagination. It’s sanctions – did I hear that popular song?????

  6. Kuakwa Katiyo says:

    By $4B budget are they referring to revenue forecast? I am scanning the document and I don’t seem to see budget allocations. Anybody with the budget allocations and do the total $4B

  7. Kuakwa Katiyo says:

    By $4B budget are they referring to revenue forecast? I am scanning the document and I don’t seem to see budget allocations. Anybody with the budget allocations and do they total $4B

  8. DRY WINE says:

    THERE IS NO BUDGET HERE. ZANU PF CANNOT BUILD, THEY ONLY DESTROY JUST AS THEY WERE TRAINED TO DO IN THE WAR. BLOW UP THE BRIDGE AND CELEBRATE.

    THE CHINESE ARE RANSACKING THE COUNTRY AND RETURN THEY BUILD PAGODAS IN GRATITUDE TO THE POWERS FOR ALLOWING THEM TO PLUNDER. KO, VANA VEDU VANEMADEGREES AVA NEMA A’S TINOVAISEPI? VOGARA HAVOZVE KUMBA? ZANU PF, WATCH OUT

  9. Nhai Supa! says:

    “Taxes- the purpose of every budget is to introduce new taxes, there is nothing unusual about it. ” – Supa has lost the plot!!!!

  10. simon says:

    tired of hearinG SANCTIONS SANCTIONS SANCTIONS. A travel ban on 100 guys doenst qualify to wreck an economy fools. Rhodesia HAD FULL OUTRIGHT SANCTIONS… yet there was electricity, civil servants paid, healthcare provision, education and banks had money. STOP making excuses…Zanu the bottom line is that you are just useless.

  11. Mr Mixed Race says:

    This budget is intended to punish the urban people.Those who quickly commented in its favour have not properly understood it unless the comments are for political gains.How can a person say budgets are there to increase taxes?You can have a budget with reduction in taxes if your balance of payment is correct.These are the types of mps we have who not care about the poor people.Let me now support my claim of being a punitive budget to urban people-see how many taxes on vehicle users-1=road tax/licencing fees
    2=toll gates for highways
    3=new fuel tax
    4=proposed local gvt road tax/levy
    5=maybe proposed urban toll gates
    Do you call this fair tax system? I call this punitive taxing for the urban people for the reasons known to the authorities.I really agree with Biti on his comments related to this terrible budget.Maybe it was intended to out wit Biti’s previous efforts.Two lawyers competing for limited resources.

  12. Khaya'bonina says:

    This is a joke , i can see why the release of the budget was delayed , Chinamasa was whipped and forced to do this , what is 4 billon -compared to the problems facing the country , ohhh, sorry guys this is the budget for one province , guess which one . I don’t care , i had been leaving in Mt South since birth , i have never been part of this budget including others— a big dam was built some years back on the upper side of Mtshabezi river , the community have never benefited from this project , instead Chineese came in being instructed by ZANU PF government to steal our water , pipes from our dam are now supplying water to Ncema dam then may be from there to Byo , our community is left with nothing , no development at all. Now it is another bugget , i wonder whether this bugget involves Matebeland province as well , i will wait and see otherwise i will dig out those Chineese pipes stealing our water , do you think that would be madness , no it would be catastrophic demonstration .

  13. Kuakwa Katiyo says:

    How much is allocated to Education, Health, etc? On what page are the allocations? If the budget did not include the allocations it can only mean the Zim dollar will be back sooner rather than later. Ministries will be allocated the Zim dollar.

  14. Parangeta says:

    “Hail to the Chief Robber Mugabe”!

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