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Tsvangirai risks all as he does deal with Mugabe on sharing
power
http://www.timesonline.co.uk/
January
31, 2009
Martin Fletcher and Jan Raath in Harare
Zimbabwe's opposition took
the momentous but hugely risky decision yesterday
to enter a unity
government with President Mugabe's Zanu (PF) party, whose
brutal and
misguided policies have brought the country to the brink of ruin.
Under
pressure from South Africa - but to the consternation of some Western
governments - Morgan Tsvangirai won the approval of his Movement for
Democratic Change (MDC) to take a step that could conceivably mark the
beginning of the end of Mr Mugabe's 28-year-rule but could equally well hand
him a much needed lifeline.
"I'm doing what's best for the people of
Zimbabwe," Mr Tsvangirai told
hundreds of jubilant supporters who had
gathered outside the MDC
headquarters in central Harare.
"He has
walked into a trap," a Western official countered. "Mugabe is not
serious
about this ... He will honour as little as he can."
Mr Mugabe, 84, will
remain President but Mr Tsvangirai will be sworn in as
Prime Minister on
February 11. The ministries will be divided between the
parties. Zanu (PF)
will keep the Defence Ministry, which controls the army,
while the Home
Ministry, which controls the police, will be shared.
Mr Tsvangirai said he
wanted the Southern African Development Community
(SADC), the regional body
which first brokered the power-sharing agreement
last September, to address
outstanding issues before February 11. These
include the release of all
political abductees and the appointments of the
Attorney-General, Reserve
Bank Governor and provincial governors. He did not
say what he would do if
SADC failed to resolve those disputes and insisted:
"We are unequivocal. We
will go into this Government."
Supporters say it will at least end Mr
Mugabe's monopoly on power and give
the MDC a chance to win support by
rebuilding Zimbabwe's social services.
They hope that Western donors will
give aid to the MDC-run health and
education ministries.
They also
say that they have no choice in a country where 94 per cent are
jobless, 80
per cent depend on food aid and wild inflation has rendered the
currency
worthless.
"Now is the time to put aside our differences and prioritise
the welfare of
the people," Mr Tsvangirai said. "We are not saying this is
the solution to
Zimbabwe's crisis. Instead our participation signifies that
we have chosen
to continue the struggle for a democratic Zimbabwe in a new
arena."
Opponents, including senior members of Mr Tsvangirai's own party,
argue that
the MDC's participation will give Mr Mugabe a veneer of
legitimacy while
Zanu (PF) retains the levers of power. They fear his regime
will co-opt MDC
ministers and MPs through bribery and ultimately swallow up
the MDC just as
it destroyed Joshua Nkomo's rival Zapu party when it was
forced to merge
with Zanu (PF) in 1987 after the massacre of 20,000 members
of the Ndebele
people.
Britain and the US have made plain their
opposition to a unity government.
One Western official said he saw no chance
of the West giving development
aid to Zimbabwe or lifting sanctions against
Mr Mugabe's inner circle
without a fundamental change of direction from the
Government.
David Miliband, the Foreign Secretary, said last night: "The
people of
Zimbabwe have too long been denied the government they deserve and
have
suffered hardship, political violence and misrule ... The new
government
will be judged on its actions... This will determine our formal
engagement,
including the provision of donor support."
South Africa
said the MDC's decision would help Zimbabwe to recover and
would lead to
fair elections. The Zimbabwe Congress of Trade Unions (ZCTU)
said, though,
that the MDC was being driven into a potential "political
trap".
The
MDC won Zimbabwe's parliamentary elections last March and Mr Tsvangirai
won
the first round of the presidential election, but he withdrew days
before
the second round after Mr Mugabe's regime unleashed a wave of
violence.
SADC brokered the power-sharing agreement to end the
political deadlock that
ensued, but its implementation has been delayed for
months by arguments over
how power should be divided. The MDC has now signed
up to an arrangement
that is a far cry from the clear-cut victory it should
have enjoyed.
Mr Tsvangirai received a rapturous welcome from a huge
crowd of supporters
as he left yesterday's meeting of the MDC's national
council. "There's light
at the end of the tunnel," proclaimed Yona Gilbert,
37 and also unemployed.
"This is a chance for the MDC to influence things
from the inside," said
Wellington Ndawana, 37, a redundant salesman. "The
MDC is full of lawyers
and intellectuals. They are cleverer than one old
man."
Motlanthe to apprise AU on Zim unity government
http://www.zimonline.co.za
by Nokuthula
Sibanda Saturday 31 January 2009
HARARE - South African
President Kgalema Motlanthe is expected to table a
report at the African
Union (AU) summit on the outcome of efforts to form a
power-sharing
government in Zimbabwe and end political and economic crisis
in the
country.
Motlanthe holds the rotating chair of the Southern African
Development
Community (SADC) that has been pressuring President Robert
Mugabe and his
opposition rival Morgan Tsvangirai to implement a
power-sharing deal they
signed last September by form a unity government by
next week.
Tsvangirai's MDC party said on Friday it would join the unity
government
that will be headed by Mugabe as President with Tsvangirai his
Prime
Minister. Tsvangirai's deputy in the MDC, Thokozani Khupe and Arthur
Mutambara, who heads a breakaway MDC faction will be appointed deputy prime
ministers.
The South African foreign ministry said Motlanthe was due
to fly from Davos,
where he was attending the World Economic Forum meeting,
to Ethiopia for the
AU summit that begins today.
"The summit of heads
of state and government, organised under the theme
"Infrastructure
Development in Africa, with emphasis on Transport and Energy
Investments is
expected to discuss among others: peace, security and
stability on the
African continent, including the DRC, Somalia, Zimbabwe,
Burundi, Sudan; the
Middle East situation as well as the global financial
crisis," the statement
said.
Regional leaders believe only a unity government could end
Zimbabwe's crisis
marked by acute food shortages, hyperinflation, deepening
poverty and a
cholera epidemic that has killed more than 3 000 people since
last August.
Under SADC's plan for the formation of a government of
national unity in
Zimbabwe, Parliament will amend the country's Constitution
by February 5 to
create the positions of prime minister and deputy prime
minister.
Tsvangirai will be sworn in as Prime Minister on February 11.
His two
deputies will also be sworn in on the same day.
Cabinet
ministers will be sworn in on February 13 to complete the process.
A
joint monitoring committee of all Zimbabwe's three main political parties
involved in the power-sharing agreement is already working on the ground,
monitoring implantation of the deal. -ZimOnline
New power-sharing deal will not end the agony in Mugabe's
Zimbabwe
http://www.timesonline.co.uk
January
31, 2009
Catherine Philp
Zimbabwe's feuding parties have agreed to rule
together, but will it work
with Robert Mugabe still in charge? African
leaders remained as divided as
ever on the issue - and on what another
power-sharing deal means for African
democracy.
The Zimbabwe crisis
dominated the debate on Africa at the World Economic
Forum in Davos,
where
Kofi Annan, the former UN Secretary-General, joined leaders from
South
Africa, Mozambique, Kenya, Senegal and Rwanda to discuss good
governance on
the continent.
President Motlanthe of South Africa
defended the decision to push for a
unity government as the only realistic
way of halting the continuing
suffering in Zimbabwe. "This time we have the
political basis for a
breakthrough in Zimbabwe," he said. "If we undo that
and present no
practical alternative it means we are perpetuating the
deterioration of that
country."
But the leaders of Senegal and Kenya
expressed grave doubts about an
agreement that leaves Mr Mugabe in power and
called for a deal granting him
immunity from prosecution to persuade him to
relinquish power.
Abdoulaye Wade said Senegal was prepared to grant asylum to
Mr Mugabe as
part of a deal for the leader vaunted as an African liberation
hero. "We
should advise Mugabe that he should be withdrawing from power," Mr
Wade
said. "We must tell him that if Mugabe does leave power, he will not be
pursued. We need to provide a smooth exit for him."
President Odinga
of Kenya - Mr Mugabe's harshest critic on the continent -
said immunity was
a price worth paying if it hastened the Zimbabwean
leader's
departure.
"Is Mugabe the one who should be presiding over formation of a
new
government?" Mr Odinga said. "Mr Mugabe must be told is that he is only
being tolerated because we want to give him a safe exit, not because he is
President - because he lost that election and the whole world saw. The way
Africa handles this process in Zimbabwe will define how democracy goes in
Africa."
Mr Odinga himself came to power as part of a power-sharing
arrangement
brokered by Mr Annan to end the violence that followed Kenya's
disputed
elections in which more than 1,000 people were killed. Mr Annan,
however,
cautioned against using the agreement as a model for others and
warned that
the settlement would fall apart if Mr Mugabe did not relinquish
some
control. "The Kenyan situation was unique," he said. "I would hope that
if
MDC agrees to join the Government, [other leaders] will not think the
situation has been resolved."
A political settlement would have to be
matched by an economic one, he
added. "There can be no solution in Zimbabwe
that does not include economic
recovery."
South Africa says it is
ready to help Zimbabwe to rebuild its shattered
economy after the formation
of the government. Western governments have
promised to release billions in
aid and investment to a new government in
Harare - but it is unclear exactly
how that will happen while Mr Mugabe
remains in charge.
Britain and
the US have led calls for him to stand down and had been
preparing a new UN
resolution calling for sanctions while the impasse
continued. South Africa
and Russia scuppered previous attempts to get a
resolution on Zimbabwe,
insisting it was a problem for Africa to solve.
Secretary-General Ban
Ki-moon's statement
Secretary-General welcomes decision of Movement for Democratic Change to
join Zimbabwe's National Unity Government
Source: United Nations
Secretary-General
Date: 30 Jan
2009
SG/SM/12079
AFR/1802
The following statement was
issued today by the Spokesperson for UN
Secretary-General Ban
Ki-moon:
The Secretary-General welcomes the agreement of the Movement for
Democratic
Change (MDC) to join a Government of National Unity in Zimbabwe,
in line
with the 15 September Global Peace Agreement and the communiqué of
the
Extraordinary Summit of the Southern African Development Community Heads
of
State and Government of 27 January 2009. The United Nations pledges its
full
support to the implementation of the 15 September Agreement.
The
Secretary-General calls on the new Government to take all necessary
measures
to address the humanitarian and economic crises in the country and
respect
democratic freedoms.
A Zimbabwe Unity
Pact - For Real This Time?
http://www.time.com
By Alex Perry Friday, Jan. 30, 2009
In what
it said was an attempt to force the regime to release its members
from jail,
Zimbabwe's opposition Movement for Democratic Change (MDC) on
Friday
announced that it will join Robert Mugabe's ruling Zanu-PF party in a
unity
government. "Aware of the suffering people of Zimbabwe, the MDC
national
council has resolved that we go into the government," party leader
Morgan
Tsvangirai told reporters. Tsvangirai stressed, however, that despite
agreement on a unity government, his party's struggle with Mugabe was far
from over. "Political detainees must be released and some of the
appointments made by President Mugabe must be reversed," he said. "Make no
mistake, we are not saying that this is a solution to the Zimbabwe crisis.
Our participation signifies that we have chosen to continue the struggle for
a democratic Zimbabwe in a new arena... regardless of how long that struggle
takes us."
Under the power-sharing arrangement, Mugabe, who turns 85 next
month and who
has ruled Zimbabwe for 28 of those years, will remain
President. Tsvangirai,
who won more votes than Mugabe in a presidential
election last March, will
take the new post of Prime Minister by Feb. 11,
presiding over a government
comprising an equal number of ministers from the
MDC and Zanu-PF. For six
months, control of the Home Affairs Ministry -
which controls the police
force that has, until now, been deployed on behalf
of the ruling party
against the opposition - will be shared between the two
parties, after which
all ministerial appointments will be reviewed. (See
images of political
tension in Zimbabwe)
A crowd of several hundred
supporters cheered Tsvangirai as he addressed
them outside the MDC meeting
in Harare, and passing motorists blew their
horns as the news was broadcast
across the Zimbabwean capital. Forbes
Sithole, a 40-year-old office clerk,
who was in the crowd listening to
Tsvangirai, said: "This is what we have
been waiting for. This man is the
only answer to our woes." Thabani Moyo, a
spokesman for the Media Institute
of Southern Africa, which champions press
freedom in Zimbabwe, was more
cautious: "I support the MDC decision because
it has been done with the
people in mind. Zimbabweans have suffered. But it
is too early to celebrate.
It remains to be seen if Zanu-PF will respect
their counterparts. That's
crucial."
Its equal standing in the
cabinet and its majority in parliament and most
local authorities puts the
MDC is in a strong position - on paper, at least.
But until now, such
formalities have meant little in the face of the muscle
wielded by the
ruling party. Mugabe's security forces massacred thousands of
supporters of
a rival liberation party in the mid-1980s. After the MDC won
the general
election in March, the security forces unleashed another wave of
violence
against the opposition, in which nearly 200 people were killed.
That
repression forced Tsvangirai's withdrawal and allowed Mugabe to "win" a
second round presidential run-off unopposed. For reasons he never explained,
at his inauguration Mugabe unexpectedly reversed course, announcing he was
prepared to share power with the MDC. Although South African mediation
efforts managed to secure agreement over forming a unity government, the
process quickly stalled when it came to allocating cabinet positions, with
the ruling party reluctant to cede significant control. Friday's
announcement by the MDC may have opened the way to ending the stalemate - if
Mugabe respects the deal.
Whether or not the arrangement secured by
the MDC results in a genuine
sharing of power, the opposition knows that a
national unity government is
key to rescuing Zimbabwe from a slow-moving
catastrophe. As the politicians
have battled over power, Zimbabweans have
been suffering under the burden of
poverty, hunger and disease, amid 80%
unemployment. After years of
hyper-inflation, Zimbabwe on Thursday finally
abandoned its own currency in
favour of the U.S. dollar and other
neighboring currencies. Millions of
Zimbabweans have fled the country in
search of a better life elsewhere. The
World Food Program warns that around
7 million Zimbabweans - more than half
the pre-crisis population - is in
need of food aid. Even more urgent is a
cholera epidemic, spawned by the
collapse of the water, sewage and public
health systems in the capital,
which the U.N. says has infected 60,000
people, and has killed more than
3,000.
Genuine political power-sharing has become the vital first step to
reversing
the country's catastrophic decline, because international donors
and
investors are unwilling to help a Mugabe regime clinging to power
against
the will of its electorate. Zimbabweans are hoping the pact will
bring the
relief workers, aid and investment from abroad needed to revive a
nation
that, until a decade ago, had been deemed a developing world success
story
by measure of its economy and health and education services.
"Tsvangirai is
going to attract rich nations like the United States of
America and Britain
to help rebuild our country," said Sithole. That is the
hope. Once again,
Zimbabweans must await the reality.
-With reporting
by correspondents inside Zimbabwe
Tsvangirai gambles on
'forced marriage'
http://www.ft.com
By Tony Hawkins in Harare and Richard Lapper and Tom Burgis
in Johannesburg
Published: January 30 2009 19:55 | Last updated: January
30 2009 19:55
The decision to join a government of national unity
represents a huge
political gamble by the leader of the Zimbabwean
opposition.
President Robert Mugabe has in his 28 years in power made an
art form of
co-opting and suborning opponents, while consolidating his
control of the
state.
The great concern for many supporters of
Morgan Tsvangirai, the leader of
the opposition Movement for Democratic
Change, and western critics of Mr
Mugabe, is that the ageing autocrat has
been thrown yet another lifeline.
While Mr Tsvangirai has fought bravely in
the nine years since he founded
the MDC, there have been persistent
questions over his political acumen. The
question now is whether he can
avoid being outmanoeuvred in a government
where he has limited
power.
As prime minister with his own people in charge of finance, health
and
education he now has formal responsibility for the very sectors that
have
been most ravaged by Mr Mugabe's misrule. Without a rescue package from
western donors, which on Friday night looked set to be kept on hold, there
is little Mr Tsvangirai can do to reverse the crisis.
David Miliband
- foreign secretary of the UK, the former colonial power -
did not rule out
support for the new government but said it would have to be
earned step by
step by measures including "an immediate end to political
violence ... the
repeal of repressive legislation, the appointment of a
credible finance
team".
By persuading his opponent to join a government of national unity,
after six
months of wrangling, Mr Mugabe appeared to have won another round
in the
long-running battle with his opposition rival which began in 2000. Of
the
two leaders Mr Mugabe will be the happier party, said Bella
Matambanadzo,
head of the Open Society's office in Harare.
Mr Mugabe
remains a pariah in the west. But he has shown that he enjoys the
backing of
regional leaders - including South Africa, Zimababwe's biggest
trading
partner - in his efforts to cling to power .
Mr Tsvangirai and officials
of the Movement for Democratic Change are
nevertheless putting a brave face
on the deal.The MDC will control 13
ministries. Together with a small
dissident MDC faction, it enjoys a small
parliamentary majority and has a
significant influence in local government.
Officials say the deal gives them
sufficient leeway to change Zimbabwe from
within. "We have a much broader
and stronger platform from which to wage the
struggle than before," said
one.
But the MDC failed to win concessions in one key area - control of
the home
affairs and the police. The ministry, which is responsible for the
country's
electoral machinery, will be shared,an option previously regarded
by the MDC
and its international allies as unworkable.
Mr Mugabe and
his Zanu PF party will also have overwhelming control over
financial
resources through the central bank.
Many analysts argue that the mutual
distrust between the parties will be
difficult to overcome.
"Neither
side wanted to be seen to defy the 'African solution'," said Sydney
Masamvu,
analyst at the International Crisis Group in Johannesburg. "It is a
forced
marriage."
Copyright The Financial Times Limited 2009
Harare's false
dawn
http://www.ft.com
Published: January 30 2009 20:00 | Last updated: January 30 2009
20:00
An end is not in sight to the nightmare of Zimbabwe. Friday's
decision by
Morgan Tsvangirai and his opposition Movement for Democratic
Change to form
a government of national unity with President Robert Mugabe
is unlikely to
return the country to political sanity and economic stability
in the
foreseeable future.
Mr Mugabe and his corrupt henchmen look
set to retain far too much control
over national security and the economy
for radical reforms to be agreed,
political violence to be stopped, and for
the international community to be
persuaded to provide the aid and financial
support essential to any economic
and social recovery. But there is just a
glimmer of hope.
Many in the MDC have deep misgivings about throwing in
their lot with
Zimbabwe's ageing and embittered leader, who has waged a
murderous campaign
of intimidation against his opponents. They have been
persuaded by huge
pressure from neighbouring states in southern Africa, led
by South Africa,
whose willingness to tolerate Mr Mugabe's rotten regime has
been a blot on
its own diplomacy.
The deal does not even provide for
MDC activists who have been imprisoned
without trial to be released. The
MDC, which had sought control of the
police to counterbalance Mr Mugabe's
control of the army, will have to share
power in the interior ministry. With
each side mistrusting and detesting the
other, it looks like a recipe for
continuous deadlock.
It is also a slap in the face for the new US
administration, which has made
clear its dislike of Mr Mugabe, but also its
readiness to engage vigorously
in seeking a solution. The deal has been
pushed through, providing a
lifeline for the Mugabe regime, without waiting
for an alternative plan.
Yet the rest of the world cannot simply wash its
collective hands and ignore
the humanitarian disaster that has overtaken
Zimbabwe. Once a thriving
agricultural exporter, today two-thirds of the
population depend on food
aid. Millions have fled to find work in
neighbouring countries.
Hyperinflation has made the Zimbabwe dollar
worthless, and this week's
budget opened the way for effective dollarisation
of the economy. Thanks to
the central bank, Mr Mugabe and his friends have
access to all the foreign
currency they want to go shopping at home and
abroad.
However misguidedly, the main political forces in Zimbabwe have
opted for
this unity government. It cannot be dismissed out of hand, but
should be
judged according to its achievements. If aid donors are not to
pour money
down a black hole, they must set precise targets, and provide
assistance as
they are achieved. They would include reform of the security
forces, the
judiciary, and the central bank. One cannot count on any of it,
but one
cannot dismiss it, either.
Copyright The Financial Times
Limited 2009
Date
set for Tsvangirai to become Zimbabwe's PM
http://www.independent.co.uk/
Opposition leader will join
government in two weeks as humanitarian crisis
grows
By Daniel
Howden, Africa Correspondent
Saturday, 31 January 2009
After
months of wrangling, Zimbabwe's opposition has agreed to join Robert
Mugabe
in a power-sharing government in the crisis-hit country. Morgan
Tsvangirai,
the leader of the Movement for Democratic Change (MDC), will be
sworn in as
prime minister on 11 February, joining his bitter adversary in
an unlikely
political experiment.
"We are unequivocal," he said yesterday after a
party congress agreed to
back his decision to join the unity government with
the ruling Zanu-PF. "We
will go into this government."
The unity
government faces an immediate battery of crises as the UN
confirmed that
cholera infections had hit 60,000 yesterday, just as the
World Food
Programme (WFP) said that food shortages would see it halve
rations to
millions of people in need of nutritional handouts.
Serious splits remain
in the MDC despite Mr Tsvangirai's assurances. Some
senior party figures
considered forming a breakaway group rather than join
Zanu-PF, said one MDC
source. Attempts by Mr Mugabe to demote the opposition
to junior partner has
left many in the MDC believing the new administration
will be
"unworkable".
The political breakthrough is unlikely to release the huge
flows of foreign
aid the country needs to check an economic implosion which
saw it formally
abandon its currency this week. Western diplomats are
unwilling to hand
significant funds to a government still overseen by Mr
Mugabe. It would not
be possible to "work with a government containing
Mugabe", said one
diplomat, speaking on condition of anonymity.
There
appears to be a strong division between the Southern African
Development
Community (SADC) bloc of regional leaders and much of the rest
of the
international community in how to deal with the crisis. All past
attempts to
use the UN to put pressure on Harare have been rebuffed by South
Africa.
However, the new Obama administration is expected to try to use its
influence to persuade South Africa's President Kgalema Motlanthe to take a
harder line on Mr Mugabe.
One of the Zimbabwean leader's toughest
critics, the Kenyan Prime Minister
Raila Odinga, also questioned the deal.
"It is the time for Mr Mugabe to be
shown the door. If he is to be given a
safe exit ... so be it," he told a
meeting at the World Economic
Forum.
Earlier this week a SADC summit ended with "an agreement by all
parties" to
enter a new government. While the MDC denied this claim at the
time it
appears that Mr Tsvangirai had decided to go ahead but was unsure if
his
party would come with him. It is not clear how much remains of the 15
September power-sharing agreement from last year, but the ruling party has
retained much of the security apparatus it has used so freely to crush
dissent.
Meanwhile the cholera epidemic is "mushrooming" according to
the World
Health Organisation (WHO), with numbers of infections passing what
had
previously been a "worst-case scenario" number of 60,000. The outbreak
has
spilled into South Africa and Mozambique. A combination of strong
seasonal
rains, crumbling infrastructure and the practice of rural burials
has seen
the disease spread to all areas.
"The epidemic is really
present in the provinces, it's jumping from one area
to another. It's
mushrooming," Claire-Lise Chaignat, WHO global cholera
co-ordinator, said
from Geneva.
Many of the 3,161 deaths from cholera since August last year
have been
caused in part by malnutrition. The WFP said that seven million
Zimbabweans
are now in need of food aid, up from 5.1 million in June. WFP's
regional
spokesman Richard Lee told AFP: "The agency is being forced to
halve the
cereal rations given to hungry Zimbabweans so that all the people
in need
can receive aid."
Strikes
loom over forex demands
http://www.fingaz.co.zw
Friday, 30 January 2009 15:52
ZIMBABWE is
headed for a stormy collective bargaining period that might
cripple further
operations across all sectors of the economy.
Workers throughout the country
have been protesting against remuneration in
Zimbabwe dollars and asking for
payment of salaries in foreign currency in
the wake of the partial
dollarisation of the economy.
In a clear sign that the workers are
distraught, employees at the Nati-onal
Railways of Zim-babwe have been on
strike for the past month, protesting low
pay and poor working
conditions.
On Wednesday last week, the country's postal service ground to a
halt as
Zimpost workers downed their tools demanding that they be paid in
hard
currency.
Not to be outdone, employees at the Zim-babwe National
Water Authority
(ZINWA) followed suit a day later, resulting in some parts
of Harare going
for days without water at a time when the country is
battling an outbreak of
cholera.
Hard on the heels of the ZINWA strike
has been that of council employees
from Harare and Bulawayo municipalities,
which effectively halted service
delivery in the country's two major
cities.
And on Friday, the Apex Council - the bargaining unit of the entire
public
service - announced it had reached a deadlock with its employer over
the
payment of civil servants salaries in foreign currency.
Union leaders
said they were mulling industrial action, joining thousands of
employees in
the private sector who have not bothered to report for duty
after the
traditional festive season break.
The latest job actions and disgruntlement
come as the country's public
schools this week opened with skeletal staff
after teachers reportedly
refu-sed to report for duty until their demands
were met.
Teachers have set their demands at a minimum salary of US$2,200 per
month.
The government had delayed the start of the new school year by two
weeks due
to chaos in the education sector.
Results of last year's public
examinations were by yesterday still to be
released, including Grade Seven
results despite the fact that Form One
pupils were due to begin classes on
Tuesday.
Economist John Robertson warned that the government and tottering
companies
would battle to acquire enough foreign currency to maintain
operations and
pay salary bills in foreign currency.
Robertson said the
country should brace for more strikes unless a political
solution was found
to address the country's economic woes.
The foreign currency craze became
inevitable in September last year when the
government licensed about 1,000
shops to sell their goods and services in
foreign currency.
"Business and
the generality of the population have lost interest in
accepting the
Zimbabwe dollar as workers and anyone offering a service now
demand to be
paid in foreign currency," said Robertson.
"These strikes point to the
desperate need in government for actual answers
to the woes facing the
country. I am certain we are going to see more of
these strikes moreso when
the political leaders are refusing to bury the
hatchet.
"No one,
including domestic workers, wants to be paid in Zimbabwe dollars.
But
business can't borrow foreign currency to pay salaries. Every lender
chooses
to lend those who are going to invest the money not borrow to
spend," said
Robertson.
Zimbabweans now pin their hopes on the successful implementation
of the long
awaited inclusive government involving President Robert Mugabe,
Morgan
Tsvangirai and Arthur Mutambara after the Southern African
Development
Commu-nity directed that the protagonists form a unity
government by
February 15.
"I am sure and certain that we are going to
see more and more of these
strikes unless and until a final political
solution is found," said
Robertson.
Lovemore Matombo, the president of
the Zimbabwe Congress of Trade Unions
(ZCTU), the country's largest labour
body, said workers were increasingly
getting impatient with the
dilly-dallying by employers to pay them in
foreign currency.
The general
council of the ZCTU resolved that all its affiliates should
negotiate wages
in terms of the United States dollar failure of which they
should direct
their members to withdraw their labour.
"It is not the fault of the workers
but they are responding to the realities
on the ground," said
Matombo.
"We are aware some employers want to resist, but they are doing this
at
their own peril," he added.
Zimbabwe Union of Journalists president
Matthew Takaona, on Monday last
week wrote to all media houses informing
them of the labour body's
resolution on wage bargaining.
"For the
compelling reasons cited by the ZCTU General Council, it is
instructive that
all works councils comply and all workers be paid in
foreign currency,"
reads part of Takaona's letter.
An official with the Employers Confede-ration
of Zimbabwe, speaking on
condition of anonymity, said fears abounded that
most companies would be
forced to close shop as they were already
bleeding.
"We are waiting for direction from the financial authorities but
it does
not augur well for most companies especially those that are not
exporting,"
said the official.
Q & A: Reporting in a
'culture of fear'
Freelance journalist Frank Chikowore visited CPJ this week
after receiving
the Tully Center Free Speech Award at
Syracuse
University. Chikowore
received the award for his brave, ongoing reporting on the crisis in
Zimbabwe. He has worked for two
newspapers in Zimbabwe, including The Nation
and the Weekly Times, which was closed down in 2005.
CPJ: Like many journalists in Zimbabwe, you
were targeted by the state for your reporting during the election period last
year.
Frank Chikowore: Yes, in early April I was arrested as
I was covering the strike, organized by the opposition party, the Movement for
Democratic Change to demand the release of presidential and parliamentary
election results. The election was held on March 29 and opposition and other
civic groups were incensed by the fact that the electoral commission took so
long to announce those results. So the opposition called for a strike to force
the authorities to release the election results. For covering that strike I was
arrested by police.
CPJ: What charges did they use to arrest you?
FC: The manner in which my charges kept on changing
shows the illegality of the arrest. First I was arrested for lacking
accreditation, but I was duly accredited as a journalist and these charges could
not stand. After spending seven days under police custody I was facing charges
of 78 counts of "attempted murder" (this is after the police changed the charges
three times already). However, the charges changed again to everyone's surprise
when I appeared in the dock to say that I was facing "public violence
charges"
CPJ: Many sources told us that you entered the
courtroom with your mouth tied in a gag. Why?
FC: I did tie my mouth during the court process. I am
convinced that press freedom is under siege in
Zimbabwe. Basically, I was being
denied the right to express myself and I thought this was a good way of
protesting. The state had found it fit to deny me my rights, which are enshrined
in the national constitution. What they were doing actually strengthened my
resolve. I was trying to send a statement, because if you continue to keep quiet
you suffer silently. I thought the best way to speak was by not speaking.
CPJ: Many Zimbabwean journalists have told CPJ that
the election period was the worst time for journalists in Zimbabwe's
history. Would you agree with that assessment?
FC: One has to understand the conditions the media was
operating under before March 29 when the presidential and general elections were
held. There was no violence prior to the first round of the elections. But when
President Mugabe realized he would lose the election, he started to use violence
as a tactic to ensure his critics were forced to vote for him during the runoff
election period. The media was also a scapegoat. The ruling party intensified
the use of violence against opposition members, civic rights groups and those
who promote free expression. It was a sad time for journalists in
Zimbabwe.
CPJ: What is the situation for journalists like
now?
FC: I think the situation is getting worse for
journalism in Zimbabwe. Zimbabweans are suffering
silently because the foreign media is not allowed inside the country. There is
no one able to expose what is going on. The overall situation has gotten worse
in terms of the economy, politics. etc. A journalist, Anderson [Shadreck]
Manyere, is
in prison. The government continues to trump up charges against civic rights
activist as well as journalists. Now journalists do not know who is next. It
creates a culture of fear among journalists. Now Anderson is facing all kinds of
charges--banditry, insurgency.
Since the closure of the country's four major newspapers, we
have seen an increase in the number of freelance journalists as well as
qualified journalists coming from universities and colleges. The problem is,
these journalists have nowhere to work. They are forced to roam the streets with
nowhere to submit their stories to. The government is determined to crush any
media organization that is deemed too critical of the government. Until this is
rectified, press freedom will continue to be under siege.
CPJ: Has the quality of reporting in Zimbabwe deteriorated?
FC: Journalists now use pseudonyms to protect their
identity. If you dare to use your real name you risk losing your license. Now
everyone is very careful in what they write and what they say. There are still a
few critical reports in the few private newspapers but it is not enough. They do
not criticize fully, fearing closure.
I must say the issue of journalists using pseudonyms has also
created problems. There are no checks and balances on the stories written. The
persecution of journalists must stop so that they can do their work without any
hindrance. For as long as the state continues to muzzle the press, we will
continue to see these half-baked stories. Now we also have a situation where
news goes online without verification of facts since people are afraid to
contact sources. The culture of poor journalism is being created by the
state.
CPJ: What information sources do Zimbabwean citizens
have access to?
FC: With the continuing economic meltdown it is
becoming harder and harder to access information, particularly outside of
Harare. It is
now expensive to buy a newspaper. The state newspapers are charging in foreign
currency when the majority of the country's work force is paid in Zimbabwean
dollars. Instead of buying a newspaper people will buy a loaf of bread. As long
as we don't address the economic crisis the information gap will continue to
widen. No one can afford a radio receiver.
We now have what are called "pirate" radio stations" such as
Studio 7 in the United States and Short Wave Radio based in London and Voice of
the People in Cape Town, South Africa. All are based outside of
Zimbabwe--as if we do not have enough
land within the country. The only way the government can deal with pirate radio
stations is by opening the airwaves. License private and community radio
stations and then you get people within the country reporting what is happening
on the ground. Other than having exiled Zimbabwean journalists who reside far
away and cannot know the full story, it would be better if the government opened
up the airwaves.
CPJ: What advice do you have for journalists who want
to report in Zimbabwe?
FC: The very first step is to let other journalists
know where we are going. The notion of scoops is no longer there in Zimbabwe. Now we must work as a team.
When we go in groups it provides a little protection in the sense that at least
someone will know what has transpired. For local journalists, I think it's
important to say that, in a nutshell, no story is worth dying for. If you have
some security concerns, you might as well decide not to cover that story. And
for foreign journalists trying to come into Zimbabwe, the safest way to do things
is to approach the authorities to get permission otherwise you'll lend yourself
into trouble.
January 30, 2009 2:40 PM ET
A
generation of unschooled kids
http://www.fingaz.co.zw
Friday, 30 January 2009 15:49
In the
past, it was heart-warming to watch young boys and girls excitedly
making
their way to school for the first day of a new term. Not anymore.
When
schools finally "re-opened" on Tuesday, more than two weeks late, one
felt
sorry for the children, knowing that they were going back to schools
whose
main feature is the absence of teachers. Prior to the delayed start of
the
new term, the press carried numerous reports about the continuing
exodus of
teachers to neighbouring countries because of poor remuneration
and
conditions of service in Zimbabwe. Those teachers that were still in the
country did not find it worthwhile to return to work unless they were paid
in foreign currency. The question is, unless Patrick Chinamasa, who is due
to present the national budget today, has a magic wand to wave to produce
millions of United States dollars, where will the government get the hard
currency? Did the authorities make any contingency plans for this
eventuality?
About two years ago when the signs were unmistakable that
the education
sector faced collapse due to neglect and lack of funding by
government, one
of the main concerns was that the system was producing
half-baked graduates
as standards continued to plummet. The reality now is
that with no learning
whatsoever taking place, large numbers of youngsters
face the real danger of
remaining illiterate. I recently overheard some
mothers discussing how they
had decided to tutor their children at home
despite the fact that they are
not trained teachers. This is an inexcusable
development for a country that
once boasted one of the best education
systems and the highest literacy
rates in Africa.
Education, which was
once sheltered in the tranquility of tradition as one
of the most valued
symbols of development and upward mobility, is now caught
in the web of
political turbulence. Where once ruling party politicians
promised universal
and free education for all, they are now ready to see the
sector die as long
as they can secure their own political futures. They can
only do this by
continuing to bury their heads in the sand.
I recall a speech by David
Chapfika, Deputy Minister of Agriculture in the
government that held sway
prior to last year's harmonised elections in
which he said Zimbabwe's
education and health delivery systems would never
collapse. In a bid to
deny that the political and economic crisis in the
country had sparked an
exodus of teachers and health professionals, Chapfika
claimed that the brain
drain would not affect these sectors. He asserted
that the flight of skills
was in fact a blessing in disguise because
Zimbabweans working in other
countries would repatriate wealth that would
revive education and
health
"Zimbabwe's education sector is such that we will continue to churn
out
highly qualified professionals who are marketable anywhere in the world.
That's why our education system and the policies we have in place ensure
that we have a high literacy rate and concentration of degrees in various
fields." Chapfika said this despite the fact that at that point, both the
Zimbabwe Teachers' Association and the Progressive Teachers' Union of
Zimbabwe had announced that their members were embarking on industrial
action for the umpteenth time to press demands for better remuneration and
conditions of service. Lecturers at tertiary institutions and universities
throughout the country were also either on go-slows or full-scale strikes
and yet a government minister could still gloat about Zimbabwe having the
best education system in Africa. I wonder what Chapfika and his colleagues
have to say now in the face of the total collapse of the system. A story
in the latest issue of the Zimbabwe Independent highlights an un-abating
exodus by Zimbabweans who no longer believe their country has anything to
offer them in terms of employment and a decent lifestyle. The paper reports
that more than 38 000 Zimbabweans have fled to South Africa in the last
four months alone. Human Rights Watch is quoted in the story attributing the
stampede to the untenable political and social realities in Zimbabwe. A
substantial proportion of those leaving no doubt consists of teachers and
other professionals whose skills are in demand in South Africa.
The
tragedy in Zimbabwe is that while these problems escalated steadily
over
the years, government officials channeled all available resources and
their
energies into a belligerent propaganda campaign devoted to denying
realities
and denouncing anyone who pointed out these shortcomings and
called for
remedial interventions.
I wonder what Chapfika's colleague, Health and Child
Welfare minister David
Parirenyatwa has to say about the total collapse of
the health delivery
system under his watch. The Zimbabwe Independent's
sister paper, The
Standard, carried another depressing story in its last
issue describing how
Zimbabweans living in the urban areas now have to seek
medical treatment at
mission hospitals in the countryside. This is a
retrogressive development
that cannot be blamed on scapegoats such as
sanctions but squarely on the
authorities for corruption and mismanagement.
The authorities need to be
honest if these institutions are to be
rehabilitated. Without sound
education and health delivery systems,
Zimbabwe will continue to be an
impostor among nations that care for the
welfare of their people.
Feedback: mmakuni@fingaz.co.zw
Zimbabwe
- reaction on previous coverage
From the Vice Chancellor of the University of Cape Town
The Physicians for Human Rights
(PHR) last week recommended - among other
things - that a United Nations-led
emergency health response should be
enforced in Zimbabwe and that Robert
Mugabe should face the International
Criminal Court. They argue that he is
committing a crime against humanity -
the results of which can be seen in
the thousands of deaths in that country
following the utter collapse of its
health service.
The report by the PHR, drawn up by independent
investigators that visited
ten provinces in Zimbabwe late last year, is
simply devastating. It is a
story of death and suffering, brutality and
misery and it spells out the
shocking depth of destruction of a country and
its people.
Tolerance of the situation in Zimbabwe and inaction
in the face of this
report makes SADC leaders, the international community
and the United
Nations and its member states accomplices in the suffering of
the Zimbabwean
people.
The report contains hard evidence of
the horror stories heard for some years
now. It records the traumatic
experiences of sick, injured and dying human
beings - many of whom will lose
their lives from treatable medical
conditions.
Mothers,
fathers and children are watching each other suffer and die because
the
system has failed. Medical practitioners face dying patients without
access
to water, electricity or basic facilities like toilets. Equipment is
desperately lacking and the most basic services are no longer
available.
The very system that exists to protect the basic human
rights of every
citizen has collapsed and its failure is undoubtedly the
responsibility of
Mugabe and his government. It is untenable that they have
allowed this. It
is even more disgraceful that evidence suggests that this
collapse is
directly linked to their misguided, selfish actions to remain in
power.
Aside from the immediate direct costs of suffering and
loss of life, the
price of a failed government and particularly the failed
health system is
huge in the long term. It will take many years and enormous
amounts of money
and resources to restore. The emigration of the majority of
Zimbabwe's
highly skilled health workers will impact on Zimbabwean society
for years to
come.
We are all now witnessing a human rights
disaster involving a far greater
number of deaths and suffering than we have
seen in recent full-blown wars.
An immediate crisis intervention is now an
absolute, critical obligation.
International statute allows the
UN to intervene politically, through
sanctions and even militarily in a
country whose government is
systematically killing large numbers of its own
unarmed, defenceless
citizens. The evidence in the PHR report is of
indiscriminate massacre by
another means. Not only has Mugabe not asked for
assistance in stopping the
cholera epidemic, he has first denied that his
subjects were dying from it
and then blamed it on western governments. Yet
it is clearly his fault and
his effective denial of treatment to tens of
thousands of patients dying
from cholera, malaria, TB, AIDS; to children
dying of pneumonia and
diarrhoea, is shocking and a loud cry for immediate
international
intervention.
All involved in the health care
profession around the world should voice our
disgust at the situation and
should redouble the pressure on politicians,
agents and bodies that are
responsible for allowing the Mugabe regime to
continue one minute
further.
Mugabe must also be pressured into allowing
international health NGOs
immediate, full and unfettered access, in effect
to take over the running
of the health system, particularly in communities
facing health crises.
These NGOs should be given funding by UN agencies and
donor governments to
re-establish medicine and equipment supply chains and
to employ local health
workers who want to work, but have no salaries, no
food, no petrol in their
cars nor taxi money to get to work, no medicines or
surgical equipment to
offer patients and no hope that their efforts will be
appreciated.
The training of health workers in Zimbabwe has
collapsed, and as a
university with a medical school, we will try to support
the ongoing
training of some of those students until their medical schools
are
re-established.
As institutions of higher learning -
where we teach young adults about human
rights, social responsiveness and
accountability - we condemn those
responsible for the human rights
catastrophe that is playing itself out in
Zimbabwe.
The
people of Zimbabwe - our close neighbours and kinsmen - have a right to
be
protected from the brutality of this incompetent, murderous
regime.
Dr Max Price
University of Cape Town
FULL TEXT: Zimbabwe 2009 budget statement
http://www.zimonline.co.za
Saturday 31 January
2009
MOTION
1. Mr Speaker Sir, I move that leave be
granted to bring in a Bill to make
Provisions in connection with Revenues
and Expenditures of the Republic of
Zimbabwe for the Financial Year January
to December 2009 and to make
Provisions for matters ancillary and incidental
to this purpose.
INTRODUCTION AND BACKGROUND
2. Mr Speaker Sir,
the presentation of this Budget is consistent with
Chapter XI, Section
103(1) of the Constitution of Zimbabwe, which requires
that "the Minister
for the time being responsible for Finance shall cause to
be prepared and
laid before Parliament, on a day on which Parliament sits,
before or not
later than 30 days after the start of each financial year
Estimates of the
Revenue and Expenditure of Zimbabwe for that financial
year."
3. Mr
Speaker Sir, while tradition in the previous years has seen the
National
Budget delivered towards the end of November and early December of
each
year, delays in completing political processes to allow for the
formation of
an Inclusive Government have not made this possible.
4. Mr Speaker Sir,
the year 2008 posed a number of challenges on our
country, resulting in the
year being one of the most difficult for our
economy.
5. The sharp
increase in inflation against a background of acute shortages
of goods and
services, poor harvests and the attendant severe food shortages
and the
deteriorating delivery of public services such as water,
electricity,
sanitation and health imposed phenomenal hardships on the
population.
6. We are, therefore, grateful for the goodwill shown by
our regional and
other international cooperating partners who have not only
endeavoured to
bring us together politically but also offered our country
immense
assistance in various forms such as food relief, agricultural
inputs, drugs,
water treatment chemicals and power, just to mention but a
few.
7. The Inter-Party Political Agreement of 15 September 2008 among
the three
political parties represented in this August House, offers an
opportunity
for cohesion and unity of purpose among ourselves for effective
implementation of holistic policies and measures necessary for us to take
advantage of the country's abundant resources for sustainable rapid economic
turnaround.
8. Unity of purpose allows and provides us immense
opportunities to
positively deal with the negative impact of sanctions and
other external
threats such as the current global financial crisis, through
re-engaging the
international community for the necessary financial
cooperation over
economic reconstruction and recovery, in particular,
balance of payment
support.
9. Therefore, in order to decisively
achieve economic turnaround, which
regrettably would in the short and medium
term be painful, cohesion and
unity of purpose not only among political
parties, but also among
institutions of Government, Business, Labour,
Co-operating Partners and
other stakeholders will be necessary.
10.
Hence the success of the 2009 Budget, which seeks to respond to the
various
challenges facing our economy will much depend on us all working
together
for the common good of the country.
11. The 2009 Budget will particularly
focus on:
. inflation reduction;
. food security and productivity
in agriculture;
. water management;
. guaranteed fuel and
electricity supply;
. improved delivery of health and education
services;
. infrastructure rehabilitation in transport (roads, railways
and airports);
. improved telecommunication systems;
. efficiency
of public enterprises;
. stimulating the productive sectors, notably
agriculture, manufacturing,
mining, tourism and construction among
others;
. provision of housing , including for those in the public
sector; and
. social protection.
12. It must be noted, however,
that implementation of the various projects
and programmes under this Budget
will benefit from skills retention and
attraction in both the public and
private sectors.
13. The performance of our productive sectors will also
require a conducive
and stable macro-economic environment, which allows
forward planning,
regular and sustainable inflows and access to foreign
currency as well as
retention of skilled manpower.
14. Consequently,
it will be critical for the country to support and
implement a holistic
framework on transactions in stable currencies, in
conjunction with reforms
aimed at restoring the value of our local currency
as a stable medium of
exchange and store of value.
15. This, Mr Speaker Sir, establishes a
level playing field for all economic
players by removing the current
distortions arising from multiple exchange
rates and the licensing of
businesses to transact in foreign currencies,
alongside the local
currency.
16. Mr Speaker Sir, before turning to the 2009 specific Budget
interventions, allow me to briefly give an overview of the global economy as
well as domestic economic and fiscal developments over the past year. These
reviews provide insight and valuable information in the crafting of our
intended interventions.
17. In the work towards formulation of the
2009 National Budget, I have
consulted widely and benefited from inputs of
the various stakeholders,
within and outside of Government.
RECENT
GLOBAL ECONOMIC DEVELOPMENTS
18. Mr Speaker Sir, the difficult economic
environment under which I am
presenting our 2009 Budget is exacerbated by
challenges that are also
affecting the global economy.
19. Honourable
Members will be aware of the recent turmoil afflicting world
financial
markets, resulting in major financial rescue interventions by
Central Banks
and Treasuries of the Organisation for Economic Cooperation
and Development
(OECD) member countries, following American and European
housing markets'
sub-prime crisis.
20. The impact of this has been a significant slowdown
in most major
economies, including the rapidly growing economies of
Asia.
21. In this regard, global economic activity, now revised downwards
by 0.2
percentage points to 3.7% in 2008, is forecast to remain subdued in
2009
with only modest recovery anticipated towards year end as the world
economy
feels the after-effects of the current financial crisis. Output
growth in
2009 is, therefore, projected not to exceed 0.5%.
22.
Developing countries are also feeling the adverse effects of global
financial crisis, with revenues from their raw material and semi-processed
exports threatened by depressed demand and, hence, falling
prices.
23. Similarly, tourism as well as external financing sources,
such as
portfolio and direct investment, lines of credit, grants and migrant
remittances are expected to suffer from this financial crisis and global
slowdown.
24. Reflecting this, economic growth in Sub-Saharan Africa
is estimated to
fall below 5% in 2009, in part reflecting the positive spin
offs from
sustained robust macro-economic policies which will maintain
inflation at
low levels averaging 10% across most of Sub-Saharan
Africa.
25. Macro-economic stability in these countries is anticipated to
remain
anchored in continued implementation of tight and complementary
fiscal and
monetary policies.
DOMESTIC ECONOMIC
DEVELOPMENTS
26. Mr Speaker Sir, I have already alluded to the difficult
economic
environment experienced by our people during the year
2008.
27. Central has been the widespread food deficit against the
background of a
poor 2007/2008 agricultural
season.
Agriculture
28. The poor performance of our agricultural
sector had its core roots in
the 2007/2008 agricultural season that began
with too much rain during
December 2007 and January 2008.
29. The
incessant rains, unfortunately, came to an abrupt end in January
2008 and
were followed by a long dry spell. The absence of adequate
irrigation
facilities, together with intermittent and unreliable power
supply
compounded the situation.
30. Decline in agricultural output was felt
across all commodities, with
notable large falls in maize, tobacco, cotton,
wheat, horticulture and soya
bean production. Tobacco output for the
2007/2008 season was 45 000 tons,
against an expected output of 73 000 tons.
Less drought-prone small grain
crops, such as sorghum, rapoko and millet,
also experienced significant
decline in output, largely from the initial
incessant rains.
31. Livestock and dairy farming, though benefiting from
the initial
improvement in grazing pastures due to the initial heavy rains,
also
suffered from the drought conditions prevailing after January. The low
rains
had the effect of lengthening the dry spell to December 2008,
resulting in
loss of animals for many farmers.
32. The grain deficit,
which had the impact of compromising supplementary
stock feed availability,
made the situation even more desperate for
livestock farmers, particularly
those in dairy.
33. This agricultural season, 2008/2009, notwithstanding
the normal rains
that the country is receiving, our farmers are beset with a
number of
challenges.
34. These include inadequate supply of such
inputs as fuel, seed,
fertilizer, as well as chemicals. Where such inputs
are available in the
open market, they are being sold in foreign
currency.
35. Farm labour has also become a challenge, with workers now
demanding
their wages in either foreign currency or basic goods.
36.
Facilities meant to assist farmers, such as the Agricultural Sector
Productive Enhancement Facility (ASPEF), can no longer cope with farmers'
financing requirements under the current hyper-inflationary environment.
Farmers are, therefore, facing serious constraints in raising working
capital, moreso given that suppliers are now quoting their goods in foreign
currency.
37. It will, therefore, be critical that in this Budget we
re-prioritise the
success of farming as a viable economic activity, and an
anchor sector to
the whole economy.
38. This is central not only to
our food security but also the production of
critical agro-inputs and
exports.
39. Much will, however, depend on timeous availability and
accessibility of
inputs such as seed, fertilizers, chemicals and fuel for
tillage, as well as
producer prices which guarantee a positive rate of
return.
40. This is the only way Government will be empowering farmers to
take
advantage of Land Reform and substantial Government assistance in the
form
of the extended concessional ASPEF, the Farm Mechanisation Programme,
the
Cattle Herd Restocking Programme, as well as subsidised
inputs.
41. The late review of producer prices can only serve to
undermine the
financial position and confidence of farmers as they fail to
recoup
production costs, thereby making it difficult to plan for the next
season.
42. This has in the past often been compounded by inefficient
Grain
Marketing Board (GMB) payment arrangements for farmers, resulting in a
number of farmers shifting from such "controlled" commodities as maize and
wheat to cash crops, such as soya beans, among
others.
Mining
43. Mr Speaker Sir, mining is second to agriculture
as a pillar to anchor
our economy both as an employer and foreign currency
earner, with potential
to contribute around a third of total export
earnings.
44. The sector, however, continues to experience decline in
capacity
utilisation and production volumes despite last year's generally
buoyant
mineral prices.
45. In the case of gold, decline in output is
notwithstanding firm prices
recorded over the past three or four years,
resulting in other countries'
gold producers expanding operations and
production.
46. Major challenges behind this include the foreign exchange
pricing
arrangements, coupled with frequent power outages, scarcity of
foreign
currency to import critical spare parts, fuel, and skills
flight.
47. Furthermore, the impact of the current global financial
crisis is also
beginning to affect the sector through depressed demand and
hence low prices
for minerals such as copper, aluminium, nickel, lead, zinc,
ferrochrome and
platinum group metals.
48. Companies are therefore
being forced to defer investment for expansion
as well as new exploration
projects, with some scaling down operations, or
closing down altogether.
Most of our major mines have, therefore, been put
on care and
maintenance.
49. Closure and suspension of mining operations, Mr Speaker
Sir, is a waste
of installed investment capital, which if not reversed can
only seriously
undermine our turnaround
efforts.
Manufacturing
50. Mr Speaker Sir, the challenges
undermining agricultural and mining
production during 2008 made the
situation facing our manufacturing companies
even more difficult, with
capacity utilisation in the sector declining
further.
51.
Consequently, manufacturing contribution to Gross Domestic Product
(GDP),
total formal employment and the economy's export performance remain
significantly lower than the existing capacity and potential.
52.
This is notwithstanding vast opportunities for value addition in the
agro-industry, particularly in canning, fruit and vegetable processing,
furniture manufacturing and textile, among others.
53. Key challenges
to be overcome in restoring and realising the potential
of our industrial
base and capacity include addressing, in a holistic
manner, such issues as
inflation, as well as guaranteed supply of such
essential services as
electricity and water.
Tourism
54. The escalation of the negative
portrayals of our country continues to
undermine our efforts to promote
Zimbabwe's tourism products.
55. This notwithstanding, developments in
the first half of 2008 indicate
that 531 357 tourists visited the country,
with Africa remaining the largest
source market contributing about 410 968
or 77.8% of total arrivals - mostly
from the Southern African Development
Community (SADC) region. The remaining
arrivals were from the Americas
(10%), Europe (7%), and Asia (3.7%). Oceania
and Middle East markets
combined contributed 2%.
56. Average hotel room occupancy rose to 39%
from 37%, over the period under
review. The majority of the clientele were
Zimbabwean nationals comprising
85% in 2007 and 91% in 2008.
57. It
will, therefore, be necessary that we invest in aggressive image
correction
programmes and tourism promotion, complemented by expenditures to
improve
our tourism infrastructure as well as other supporting
infrastructure in
transport and telecommunications, among others.
58. This includes
recapitalising the aviation industry, especially the
airports infrastructure
and Air Zimbabwe, to improve accessibility into and
within the country,
refurbishment, modernisation and capitalisation of the
transport system to
include taxis, car hire services and tours among others.
59. Investment
in internal cohesion and unity of purpose among our people
will also
facilitate the rapid recovery of tourism, benefiting also from the
potential
spin offs from the hosting of the 2010 Soccer World Cup in
neighbouring
South Africa.
Energy
60. Energy supply continues to constrain
operations of our productive
sectors, particularly agriculture,
manufacturing and mining. While, the
supply of liquid fuels has been
improved through licencing of private
importers, power generation and supply
has lagged behind demand as a result
of deferring planned investments for
expansion.
61. Notwithstanding a Government decision to allow a trigger
mechanism for
tariffs adjustment, delays in reviews of tariffs which reflect
production
costs have remained an impediment for the operations and future
expansion
programmes of Zimbabwe Electricity Supply Authority
(ZESA).
62. ZESA has, therefore, continued to rely on the fiscus for
maintenance and
rehabilitation of its thermal power stations and
transmission network,
procurement of coal and payment for water usage at
Kariba.
63. The above challenges have been aggravated by the widespread
vandalism of
such electricity transmission infrastructure as transformers
and copper
cables, thereby worsening power supply and
reliability.
64. The joint venture between ZESA and NamPower has,
however, alleviated the
situation by improving power generation at Hwange
Power Station.
65. As a result, current power generation has risen to 922
mega watts (MW)
from 569 MW against total internal potential production of 1
670 MW, and
demand of 2 279 MW.
66. A number of projects have been
identified to improve power generation
and supply. These include the
refurbishment of Hwange Power Station, Stages
1 and 2, with the potential of
generating additional 480 MW and 380 MW,
respectively, as well as the
restoration of small thermal power stations in
Harare, Bulawayo and Munyati
to generate an additional 125 MW. This would be
augmented by imports of 400
MW from the region.
Urban Water Supply
67. Most urban areas
continue to face water and sewerage challenges as a
result of Zimbabwe
National Water Authority (ZINWA's) inability to discharge
its mandate. This
has been compounded by the sub-economic tariffs the
parastatal levies on
residents for services, resulting in their continued
reliance on the
fiscus.
68. The water and sewer challenges faced by residents exacerbated
the recent
cholera outbreak which necessitated further Government support to
ZINWA to
enable the parastatal procure water treatment chemicals,
maintenance and
rehabilitation of sewerage and water conveyance
systems.
Public Transport
69. The commuting public is facing daily
fare escalations which are taking
up workers' full incomes. Difficulties in
accessing cash from banks are also
compounding this problem.
70.
Furthermore, some public transport operators are now demanding fares in
hard
currencies, leaving a large part of the commuting public with
challenges of
obtaining the necessary foreign currency.
Telecommunications
71.
The telecommunications sector has also not been spared from the current
difficulties the economy is going through. Foreign currency shortages in the
economy for the importation of the necessary equipment, has severely
militated against mobile phone companies' efforts to expand their networks
by installing more base stations and absorb more customers.
72. This
has resulted in poor service delivery due to network congestion and
acute
shortage of network lines. The continued imposition of sanctions on
the
country stalled major investment projects particularly the fixed network
providers as they could not get foreign investors for their
re-capitalisation.
73. The dispensation extended to mobile phone
operators to charge airtime in
foreign currency will, therefore, assist them
raise foreign currency for the
importation of much needed
equipment.
Health Delivery System
74. In the Health sector, most
of our health delivery institutions have
scaled down operations, with some
facilities closing down all together. Key
challenges include lack of
equipment, essential consumables, drugs as well
as skills loss.
75.
Medical aid insurance schemes have been rendered ineffective as members'
contributions are eroded by inflation. Accessing health care from private
health institutions requires payment in hard
currencies.
Education
76. The education sector has also not been
spared from the current
environment. While some teachers have left the
country in search for better
working conditions, not all those who remain
have been reporting for duty,
owing to deteriorating conditions of service
and the challenges on public
transport mentioned above.
77. The above
has also affected a number of education programmes, especially
examinations
marking, with a huge backlog going back as far as June
2008.
Inflation
78. Mr Speaker Sir, rising inflation has seen our
local currency fast losing
its role as a medium of exchange and store of
value. Hence, as a result,
both licenced and unlicenced traders have
resorted to using hard currencies
as a way of cushioning themselves from the
impact of inflation.
79. In this regard, comprehensively dealing with
inflation remains one of
the country's major challenges for stabilising this
economy and realising
real savings and investment rates necessary for
growth.
80. Excessive money supply growth rates, emanating from
unbudgeted
expenditures made through the Reserve Bank, as well as low supply
of goods
and services remain the major sources of inflation.
81. The
current policy on import liberalisation and shift to transacting in
hard
currencies have, however, seen some improvement in the supply of goods
and
services, accompanied by stabilisation of those prices denominated in
foreign currency.
82. An opportunity, therefore, arises for
stabilising prices in the local
currency as well as restoring the value of
our local currency through
embracing firm measures entailing tightening both
fiscal and monetary
policies and extension of support and incentives which
boost the capacity of
our productive sectors and, hence, supply of goods and
services.
83. Mr Speaker Sir, the 2009 Budget thrust should, therefore,
shift from
policies that promote and fuel consumption to those which create
wealth,
through supporting our productive sectors, particularly agriculture,
mining,
tourism and manufacturing, whose capacity utilisation is now below
30%.
84. Consistent implementation of such policies will ultimately
increase
output, thereby, reducing inflationary pressures.
External
Sector
85. Mr Speaker Sir, our export performance has been deteriorating
over the
years, and as a result, the country has been experiencing balance
of
payments problems with a deficit of US$410 million being recorded in
2008,
from US$33 million in 2007.
86. The situation is reflective of
constraints bedevilling our economy
resulting from sanctions, drought, and
depressed prices on the international
commodity
markets.
Exports
87. Mr Speaker Sir, in 2008 exports under
performed, amounting to US$1.376
billion compared to US$1.606 billion in
2007. This represents a 14.32%
decline in exports of goods and
services.
88. Mineral exports were the major contributor to total
exports, with US$676
million, or 51% of total exports in 2008, compared to
US$801.8 million in
2007. The decrease of 15.7% was largely a result of the
global financial
crisis which led to depressed demand for
minerals.
89. Tobacco exports amounted to US$203.7 million, representing
a 24.3%
decrease over the 2007 exports of US$247.3 million. The volume of
tobacco
sold in 2008 fell short of the targeted 75 million kgs as it is
believed
some growers are still holding on to the crop in protest against
low prices.
90. Agriculture and manufacturing contributed 15% each,
reflecting declines
of 4.5% and 12%, respectively. In both sectors, lack of
inputs and low
capacity utilisation, as well as high operational costs
contributed to this
underperformance.
91. Tourism receipts amounted
to US$29.1 million, representing a 55% decline
from the previous year.
Negative publicity of the country continued to
undermine the performance of
the sector.
Imports
92. Mr Speaker Sir, our Nation continues to be
a net importer of goods, in
part due to the substantial amounts of foreign
currency required to import
such critical inputs as raw materials, fuel,
electricity and other
manufactured imports.
93. In this regard,
imports increased by 7.6%, from US$1.9 billion in 2007
to US$2 billion in
2008
94. Growth in imports also reflected increased food imports during
the year
2008 as Government instituted drought mitigation measures to ensure
food
security for households affected by the poor rains received during the
2007/08 cropping season.
Capital Account
95. On the capital
account, net inflows of US$98.5 million were recorded. Of
this, drought
relief, medical drugs to combat cholera, Human
Immunodeficiency
Virus/Acquired Immuno Deficiency Syndrome (HIV/AIDS) and
the purchase of
water treatment chemicals accounted for some US$73 million.
FISCAL
DEVELOPMENTS IN 2008
96. The high inflation environment during 2008 meant
significantly higher
revenue inflows estimated at $14 960
quintillion.
Tax Revenue
Pay As You Earn (PAYE)
97.
Cumulative collections from individuals' Pay As You Earn for 2008 were
$2
400 quintillion. This was mainly attributable to the frequent salary and
wage reviews in both public and private sectors, against the background of
the prevailing inflationary environment.
Corporate Tax
98.
Corporate tax collections during 2008 amounted to $9 600 quintillion.
This
performance was vastly due to higher nominal profit margins realised by
companies and intensified audits by the Zimbabwe Revenue Authority (ZIMRA)
to enforce compliance and recover revenues. The issuance of licences to
trade in foreign exchange also contributed towards boosting the performance
of some companies.
Value Added Tax (VAT)
99. Value Added Tax
amounted to $792 quintillion during 2008, accounting for
only 5.3% of total
revenue. The poor performance was spurred by price
controls, as well as
declining availability of products on the official
market.
Customs
Duty
100. Customs duty collections performed poorly, contributing only
$2.8
quadrillion during 2008.
101. This negative performance
reflected the sluggish movement of the
exchange rate valuation factor for
duty purposes, which remained so low that
it suppressed collections under
this revenue head.
102. The suspension of duty on basic commodities from
May 2008 also
contributed towards poor customs duty
performance.
Excise Duty
103. Excise duties during 2008 amounted
to $96.7 quintillion, largely on
account of sales of second hand motor
vehicles. Shortage of goods to be
levied for excise duty, due to foreign
currency unavailability, has
contributed to the poor showing of the revenue
head.
Other Indirect Taxes
104. Other indirect taxes raised $1 400
quintillion, mainly stamp duties on
transactions on the local stock exchange
towards year end.
Non-Tax Revenue
105. Regular review of fees and
charges for Government services has seen an
improvement in revenue inflows
from this revenue head.
106. Resultantly non tax revenue collections
amounted to $452.2 quintillion.
Expenditure Developments During
2008
107. Mr Speaker Sir, while underlying inflationary pressures raised
nominal
revenue collections significantly to $14 960 quintillion, their
impact on
the 2008 Budget was also to raise Ministries' expenditures to
$51.7
quintillion, rendering the 2008 Budget appropriation provisions
insignificant.
108. Higher expenditures were incurred with respect to
reviews on salaries
and wages which were driven by continued increases in
cost of transport and
housing as well as rising prices of general goods and
services.
109. In addition, operational and running expenses of
Ministries, as well as
cost escalations for public sector programmes, and
projects required
additional provisions.
110. Mr Speaker Sir, the
2008 Harmonised Elections, including the
Presidential Election run-off also
incurred higher expenditures than
originally budgeted.
Financial
Performance and Legal Compliance
111. Mr Speaker Sir, although total
expenditures for 2008 of $51 quintillion
were within the realised total
revenue collections of $14 960 quintillion,
this implied excess expenditures
and revenues above the approved 2008
Budget. Such additional expenditures
and revenues would have been ordinarily
addressed through a Supplementary
Budget had Parliament been sitting.
112. In light of the dissolution of
Parliament since March 2008, the
Additional Budget provisions of $51
quintillion to the end of December 2008,
were therefore, issued in terms of
Part XI Section 103 (7) of the
Constitution of Zimbabwe and Section 27 (1)
of the Audit and Exchequer Act
(Chapter 22:03), which provides
that:
" . . . the President may authorise the issue of monies from the
Consolidated Revenue Fund for the purpose of meeting expenditure necessary
to carry on the services of Government during the period beginning on the
dissolution of Parliament and expiring three (3) months after the day on
which Parliament first meets after that dissolution."
113. In
accordance with our Statutes, after expiry of the dissolution of
Parliament,
an Appropriation by Parliament to cover the additional
provisions of $51
quintillion is supposed to be submitted in the first
Appropriation Act after
the issues were authorised.
114. Mr Speaker Sir, I now accordingly
propose to table the 2008 Additional
Estimates of Expenditure of $51
quintillion for the necessary Appropriation
by Parliament.
Programmes
& Projects Performance
115. Mr Speaker Sir, inflation has had some
negative effects on public
expenditure as evidenced by the deterioration in
service delivery.
116. The deterioration in public infrastructure
including the country's
water and sewer reticulation systems, and other
municipal services, as well
as non-completion of critical projects is
further evidence of the impact of
inflation, foreign exchange and other raw
material shortages.
117. Furthermore, resource constraints also
undermined Government's capacity
to retain staff as well as adequately
finance programmes and projects,
especially in the health and education
sectors, thereby rendering them to
operate below capacity, especially in the
last half of 2008.
118. This Budget is, therefore, proposing measures to
arrest and reverse the
decline in public service delivery.
119. Mr
Speaker Sir, notwithstanding the challenging environment Government
faced
during the course of the year, it is gratifying that other basic
public
services remained functional.
120. I, therefore, commend respective
Public Servants manning those areas
for remaining tenacious and dedicated to
their work during 2008. This was
reflective of true and immeasurable sense
of patriotism during a difficult
and unforgettable year.
121. Mr
Speaker Sir, the experience we have had under this hyperinflationary
environment should rally us together in implementing measures for the
reduction of inflation. This way, we would begin to see some restoration of
public services to our people.
Cooperating Partners
122. Mr
Speaker Sir, since August 2008, the Nation has been experiencing a
devastating cholera epidemic, which has since spread to all the country's
ten provinces.
123. Allow me to extend my appreciation to our
cooperating partners for the
immense assistance they are rendering to us
during these challenging times.
124. The country received cash donations
amounting to over US$65 million,
whilst contributions in kind included
vaccines, cholera medication, water
purification tablets & chemicals,
medical equipment, among others.
Assistance was also channelled towards
rehabilitation of water and
sanitation systems and public awareness
programmes.
125. International cooperating partners included the European
Union, as well
as Australia, Canada, China, Japan, the Republic of Korea,
Switzerland, the
United States of America, among other
countries.
126. Their contribution was complemented by support from our
SADC regional
neighbours.
127. Support from the rest of Africa was
led by the African Union, other
countries, together with the African
Development Bank and included Libya,
which also provided medical
specialists.
128. The Ministry of Health and Child Welfare, together with
the World
Health Organisation, and other health sector partners who include
the United
Nations International Children's Education Fund (UNICEF) have
established a
comprehensive and coordinated cholera response operational
plan to address
the needs of the population in affected areas.
Food
Security
129. Mr. Speaker Sir, Government efforts to enhance summer
cropping for the
2008/9 agricultural season benefited from support by
various cooperating
partners who, amongst others, include the Food and
Agriculture Organisation
(FAO), the World Bank, South Africa, Central
Emergency Response Fund,
Venezuela, Ireland, Sweden, Spain and the United
States of America.
130. These and other cooperating partners complemented
Government support in
the agricultural sector by providing tillage services
as well as provision
of agricultural inputs such as maize seed, small
grains, chemicals,
fertilizers and fuel, valued at over US$50
million.
131. Therefore, allow me to acknowledge and appreciate on behalf
of
Government the valuable assistance received from the various cooperating
partners.
BUDGET POLICY PROPOSALS
Macro-Economic
Framework
132. In seeking to address our economic challenges, the Budget
is premised
on a Macro-economic Framework targeted at reducing inflation to
double digit
levels as well as a positive economic growth rate of about 2%
in 2009.
133. Based on past trends, revenue collections are normally
about 30% of
nominal GDP. Consistent with that, our projected nominal GDP of
about US$5.5
billion translates to an equivalent of around US$1.7 billion as
projected
revenue for 2009.
134. Given the need to contain inflation
through tightening of our fiscal
and monetary policies, Government is
proposing a balanced Budget linking our
expenditures to actual
revenues.
135. In focusing on specific Budget policy measures,
stakeholders have
consensus that the success of the 2009 Budget is much
dependent upon
cohesion and unity of purpose in the implementation of all
agreed policies.
136. I, therefore, put forward the following policy
proposals as part of the
2009 National Budget.
Liberalisation of the
Foreign Exchange Market
137. Honourable Members will be aware that in the
hyper-inflationary
environment characterising the economy at present, our
people are now using
multiple currencies for day to day business
transactions, alongside the
Zimbabwe dollar.
138. These currencies
include the South African rand, United States dollar,
Botswana pula, Euro,
pound Sterling, among others.
139. In line with the prevailing practices
by the general public, Government
is, therefore, allowing the use of
multiple foreign currencies for business
transactions, alongside the
Zimbabwe dollar.
140. Consequently, the 2009 Budget Estimates are
presented in both local and
selected multiple foreign
currencies.
Data Compilation
141. Consistent with the wide
utilisation of multiple currencies in domestic
business transactions, the
Central Statistical Office has, with effect from
this month, also begun to
track developments in price indices in foreign
currency terms.
142.
This also assists overcome situations where focus was more on tracking
movements in the parallel market exchange rate.
Currency
Revaluation
143. As the Zimbabwe dollar trades concurrently with other
currencies, it
will be critical that it be re-valued and thereafter maintain
stability.
144. However, sustainable currency stability cannot be an
outcome of decree
or legislation alone.
145. Essential for shoring up
the value of the Zimbabwe dollar will be
implementation of a combination of
strict and painful fiscal and monetary
measures that relate the Zimbabwe
dollar monetary base to developments in
the real sector, and avoidance of
recourse to money printing beyond the
economy's production of goods and
services.
146. Realising this requires discipline and commitment to our
expenditure
and revenue targets and, therefore, expenditures outside the
Budget will not
be entertained.
147. This Budget, together with the
Reserve Bank Governor's forthcoming
Monetary Policy Statement, will be
making the necessary indications and
commitments in this
direction.
148. The above measures will be complemented by interventions
on enhancing
production and supply.
Quasi Fiscal
Operations
149. Government has been constrained from funding some of the
public
projects during the last nine years or so due to the sanctions
imposed on
the Nation.
150. Honourable Members would be aware, as
reported from time to time in the
Reserve Bank Governor's Monetary Policy
Statements, that some public sector
programmes and projects have been funded
through the Bank's quasi fiscal
operations.
151. These were in the
areas of agriculture, dam construction, education and
health, among other
activities.
152. I would want us to know that such expenditures which
have been incurred
over the period 1 December 2003 through to 31 December
2008 have been
settled in full from the Reserve Bank's receipts from
internal investments.
153. Hence, as at 31 December 2008, the Reserve
Bank was able to remove all
these expenditures from the Bank's books through
a Sinking Fund which had
been set up to cover these
expenditures.
154. Mr Speaker Sir, it therefore follows that such
expenditures which
amounted to $1 111 quintillion, and were going to be a
first charge on the
fiscus and thus a burden on taxpayers, have been
liquidated. I am sure that
Honourable Members will join me in extending our
gratitude to the Reserve
Bank for this.
155. The Bank's balance sheet
is now free of these quasi fiscal expenditures
and the Reserve Bank will now
concentrate on its major mandate of assuring
the stability of prices and the
financial sector.
Remuneration of Public Servants
156.
Remunerating public servants solely in local currency in an environment
where the domestic goods and services market has been liberalised to allow
for multiple currency pricing, and where domestic confidence in the local
currency has temporarily collapsed, would dis-empower workers.
157.
In this regard, Government proposes a Remuneration Framework for all
public
servants which provides for:
. Payment of salaries in local currency,
with periodic reviews in line with
cost of living developments;
.
Payment of a monthly foreign currency allowance, to facilitate access to a
basket of goods and services now being charged in convertible foreign
currencies;
158. The foreign currency allowance will initially be
through a Voucher
system pegged to a basket of basic goods for a family of
six.
159. The Voucher system is an interim arrangement, and will be
phased out
gradually in favour of payments through the banking system in
line with
improvements in foreign exchange inflows.
160. Government
is working on modalities for the introduction of this
facility which will be
introduced in February 2009.
161. Mr Speaker Sir, review of the monthly
foreign currency payment
allowance will be guided by foreign currency
revenue inflows arising from
economic performance and the implementation of
foreign currency based tax
revenue measures.
Licencing
Requirements
162. Mr Speaker Sir, concerns have been raised with
Government over
licencing requirements and processes.
163. Given that
essentially all transactions can now legally be undertaken
in either local
or foreign currency, Government is simplifying the licencing
requirements
and arrangements to transact in foreign currency.
164. Allow me,
therefore, to assure Honourable Members that the licencing
requirement to
transact in foreign currency is neither intended to be a
revenue raising
measure nor to serve as an entry barrier, by imposing
additional costs on
local producers and retailers.
165. Its main purpose is to record and
recognise traders for tax purposes,
as well as inculcate systems to deal
with such malpractices as use of
counterfeit notes.
166. The Reserve
Bank will be announcing the necessary details as part of
its Monetary Policy
Statement.
167. ZIMRA will also be communicating tight measures to
address potential
avoidance of payment of tax in the currency of trading, a
case in point
would be payment of tax in local currency for trading income
realised in
foreign currency.
Exchange Rate Framework
168.
Section 47 of the Reserve Bank Act mandates the Minister of Finance to
set
the country's Exchange Rate Policy for management and implementation by
the
Reserve Bank of Zimbabwe.
169. Consistent with this, the Reserve Bank
will implement an enhanced
exchange rate framework that promotes foreign
exchange generation in the
economy, as well as encourage the inflow of both
short-term and long-term
capital.
170. The Governor of the Reserve
Bank will, in his forthcoming Monetary
Policy Statement, spell out the
operational modalities of this new exchange
rate framework.
Insurance
Companies and Pension Funds
171. The Insurance and Pension Funds
Industries are a critical component of
the country's developmental
institutions, through mobilisation of savings
for both public and private
investment.
172. Hence, as part of the 2009 Budget policy measures,
insurance companies
and pension funds, including the National Social
Security Authority (NSSA),
have been given the flexibility of conducting
business in either local or
foreign currency.
173. With effect from 1
February 2009, insurance companies shall be granted
licences to trade in
foreign exchange and to collect premiums in foreign
exchange.
49
174. Similarly, pension funds shall be granted
licences to trade in foreign
exchange and to receive contributions in
foreign exchange.
175. Consistent with this, the following Prescribed
Asset requirements shall
apply with effect from 1 February 2009:
.
Long term insurance companies will hold 7.5% of their foreign currency
assets in Prescribed Assets denominated in foreign exchange, whilst short
term insurance companies will hold 5%.
. Pension funds, also
collecting their contributions in foreign exchange,
will be obliged to hold
10% of their foreign exchange assets in Prescribed
Assets denominated in
foreign exchange.
176. Government will be issuing, through the Reserve
Bank, the requisite
foreign exchange instruments which will be open not only
to Insurance
Companies and Pension Funds, but also to any other investor in
the economy.
177. In cases where the local currency continues to apply,
the current
prescribed assets ratios of 35%, 30% and 25% for pension funds,
long, and
short term insurance companies shall apply,
respectively.
Stock Exchange Trading
178. The Zimbabwe Stock
Exchange remains a critical pivot for socioeconomic
development through its
intermediary role between surplus economic agents
and those intending to
raise capital.
179. Left to their whims, however, Stock Exchanges can
spin out of control,
particularly in cases where there are no strict
oversight rules of play.
180. In order to ensure that the Zimbabwe Stock
Exchange fully plays its
developmental role, the Ministry of Finance,
through the Securities
Commission, is putting in place a rigorous code of
ethics, as well as
stringent licencing and risk management systems for
stockbrokers.
181. Consultations are on-going over measures to ensure
that the Zimbabwe
Stock Exchange also serves as an effective vehicle for
foreign exchange
generation.
182. In this regard, Mr Speaker Sir,
stock market trading in both local and
foreign currency will be
allowed.
183. The necessary considerations underway to facilitate trade
on the local
stock market in foreign currency include:
. Level of
domestic foreign currency liquidity to allow for meaningful stock
market
trading.
. Level of foreign investor participation, vis-à-vis promotion
of local
ownership and participation in local companies. At present, a
single foreign
investor can own up to 10% of a listed company and up to a
maximum of 40%
for all foreigners combined.
184. The Ministry of
Finance will, through the Securities Commission, be
announcing the detailed
implementation modalities in due course.
Utility Authorities
185.
Transacting in foreign currencies limits the scope of financing the
requirements of our public enterprises through domestic Central Bank money
printing.
186. Government is, therefore, empowering local authorities
and public
enterprises such as ZESA, ZINWA, and National Oil Company of
Zimbabwe
(NOCZIM) among others, to charge for their services in both local
and
foreign currencies.
187. This will be complemented by periodic
review of tariffs to economic
levels which allow institutions to cover
operational costs, consistent with
the "User Pays" principle.
188.
The respective line Ministries will, therefore, be submitting to
Treasury,
their proposals on tariffs as well as other measures necessary to
enhance
the efficiency of our public enterprises.
NOCZIM
189. To enable
NOCZIM to raise sufficient funds to import fuel on a
sustainable basis
without reverting either to Treasury or the Reserve Bank
for foreign
currency, all customers, Government and farmers included, will
pay the full
price in foreign exchange.
190. With regards to the review of fuel
prices, the Minister of Energy and
Power Development will implement a
trigger mechanism in the pricing of all
petroleum products that immediately
captures shifts in international prices
and procurement
costs.
ZESA
191. Mr Speaker Sir, with electricity tariffs in local
currency continuing
to lag behind cost of supply, ZESA can no longer meet
basic payment
obligations to suppliers of consumable materials, spares and
equipment, let
alone electricity imports payable in foreign
currency.
192. Based on the already Government approved cost-plus
approach, the
electricity tariff is being adjusted with effect from 1
February 2009 by 47%
from the current US$0.067 to US$0.098 per Kilowatt per
Hour (kWh) in order
for ZESA to recover costs of supply. This is payable in
both local and
foreign currency.
193. Whilst adopting a cost
reflective tariff approach, a tariff regime
providing for a lifeline tariff
of up to 50 kWh hours for domestic consumers
will be used to provide for
continued subsidisation of low income
households, while cost reflective
tariffs are to be charged on other
consumer categories.
194. With
regards to farmers, who remain the anchor of our agricultural
reforms, while
Government recognises the need to cushion them, the current
subsidy of 55%
of the tariff being paid by the farmers is not sustainable.
195. Farmers
will, therefore, pay 80% of the obtaining tariff level with
effect from 1
February 2009.
ZINWA
196. The capacity of ZINWA to effectively
manage water supply and sewer
reticulation throughout the country's urban
centres is severely
overstretched.
197. The centralisation of water
management in ZINWA has been characterised
by bureaucratic inefficiencies,
leading to low staff morale.
198. Equally, the burden that ZINWA is
placing on the fiscus is
unsustainable.
199. Various submissions for
the restoration of its role in the management
of bulk water supply have,
therefore, been put forward.
200. Government is, therefore,
decentralising the management of water to
local authorities with effect from
1 February 2009. This entails that ZINWA
reverts back to its status prior to
the directive of 9 May 2005.
201. Accordingly, ZINWA and local
authorities should begin the processes for
smooth hand over and take over
transfers.
202. Given that water reticulation infrastructure in some
major urban
centres has become obsolete, Government will be working with the
respective
local authorities in mobilising resources for the rehabilitation
of such
infrastructure.
203. The charging of economic water tariffs
will complement such resource
mobilisation measures.
Support for
Productive Sectors
204. Government recognises that stabilising prices of
goods and services
will benefit from improved domestic production supply
and, hence, measures
directed at supporting our industries will be
critical.
Agriculture
205. In agriculture, Government proposes
measures for continued support to
farmers, including improved market-based
access to inputs, farm
mechanisation as well as support for extension
services.
206. Engagement of the fertilizer industry to enhance local
production and
improve distribution is also underway.
207.
Furthermore, the Ministry of Agriculture will be submitting proposals
that
would enhance greater productivity on the land.
Grain Prices
208.
The commencement of the 2008/09 summer season has benefited from the
good
rains received to date and the support rendered to farmers through
agricultural inputs and farm mechanisation interventions.
209.
Focusing on the 2009 winter wheat and the 2009/10 summer agricultural
programmes, Government has adopted a grain producer and selling pricing
framework that guarantees viability and market returns to farmers'
investments as is the case with other economic players.
210. In this
regard, with effect from 1 February 2009 the marketing
arrangements for
grain will be as follows:
. All maize and wheat grain exports are
suspended, until further notice, to
allow for build up of the country's
strategic physical grain reserve stocks.
. The GMB will now announce Free
On Board (FOB) import parity related maize
and wheat grain floor prices in
foreign currency or the local currency
equivalent. Hence, the GMB assumes
the role of buyer of last resort.
. Millers and any other grain merchants
will now compete in the purchase of
maize and wheat grain direct from
farmers, alongside the GMB, at prices not
lower than the import parity
related floor price.
211. Consistent with this Policy Framework, millers
are now also able to
participate in marketing arrangements with the GMB to
purchase in foreign
exchange some of the wheat already delivered to the
GMB.
Seed Maize Prices
212. Mr Speaker Sir, consistent with the
liberalisation of our grain
marketing, the price of seed maize payable to
farmers upon harvest will be
in both local and foreign currencies, and
pegged at F.O.B. import parity
levels for commercial maize plus
30%.
213. The selling price of seed maize to farmers by Seed houses will
also be
in both local and foreign currencies, and pegged to levels which
take
cognisance of seed maize growers' price as well as processing
costs.
Financing of Agriculture
214. Mr Speaker Sir, Honourable
Members will be aware of the large role
Government has been playing in the
funding of agriculture, both directly
from the Budget as well as from
Reserve Bank facilities such as ASPEF.
215. Financing of agriculture,
however, should ordinarily be the
responsibility of our banking system,
drawing from the deposits by the
general public.
216. Hence, the
Reserve Bank will be coordinating measures to restore and
enhance the level
of participation by our banks and other financial
institutions in lending to
our farmers. This will be both in terms of
provision of short term as well
as medium term agricultural finance.
217. Short term finance facilities
will essentially avail 90 - 180 day
working capital for purchase of inputs
and other requirements. Syndicated
financial facilities, guaranteed by
Government, through issuance of such
financial instruments as Grain Bills
offer great opportunity for tapping
into what would otherwise remain idle
bank deposits.
218. Furthermore, the Reserve Bank will be taking the lead
in coordinating
the banking system in the provision of medium term finance
to capacitate
farmers through access to purchase of equipment. This, Mr
Speaker Sir, could
be on the basis of such arrangements as lease and hire
purchase finance
facilities.
219. The participation of banks in
agricultural finance will be strengthened
by the liberalisation of
agricultural pricing and marketing arrangements
alluded to
above.
Crop Input Packs
220. Mr Speaker Sir, greater participation
by the banking sector in
agricultural finance will allow for Government
capacity to support research
and extension services, as well as targeted
input support to the smaller
farmer in our communal and resettlement
areas.
221. I will, therefore, be proposing a crop input pack support for
the small
scale farmer, under which 10kg seed packs and two 50kg bags of
fertilizer
will be provided.
Contract Farming
222.
Furthermore, Government will for the coming summer crop season be
calling
for increased contract farming.
223. In this regard, agro-processing
companies are now invited to begin
making arrangements for provision of
inputs, financing and extension support
to farmers on a Contract farming
win-win basis.
Manufacturing
224. The main thrust of this Budget
is to improve production through support
to our local industries. Increased
supply will ultimately stabilise prices
of goods and services as well as
avoid over-reliance on importation of
finished products.
225. This
will entail measures that contribute to the competitiveness of
domestic
production, and review of import duties that offer unfair
competitive
advantage to foreign produced goods.
226. Unless local producers are
competitive, Zimbabwe will become a market
for imported value added goods,
hastening the demise of local manufacturing
and loss of industrial capacity
as more jobs are exported to those countries
supplying our
markets.
227. Mr Speaker Sir, I have already indicated policy frameworks
on the
extended use of multiple currencies to producers and previously
unlicenced
retailers, as well as simplifying licencing requirements and
processes.
228. Over and above these, I will shortly be announcing review
of price
controls, as well as measures for fair competition with imports,
without
necessarily promoting and protecting domestic production
inefficiencies,
incentives and tax measures to be extended to companies
targeted on merit of
their contribution to the economy.
Pricing of
Goods and Services
229. Following the import liberalisation policy, we
have started to witness
some benefits in improved supply of goods and
services.
230. Prices in foreign exchange which were initially far above
import parity
levels, reflecting shortages and monopolistic behaviour, have
now started to
stabilise and in some cases gravitating towards import parity
levels. This
trend reflects improvement in stocks as well as
competition.
231. Consistent with this, the domestic price regime is
further liberalised
to remove the restrictive price controls.
232.
The role of the National Incomes and Pricing Commission has, thus, been
reviewed to focus on monitoring price trends obtaining in the sub-region and
beyond, guiding producers and retailers as well as advising Government on
import parity based pricing.
Imports of Basic Goods
233. Mr
Speaker Sir, while it is critical that we begin to restore domestic
production levels, taking advantage of the liberalised currency and pricing
environment, Honourable Members will acknowledge the need for us to support
importation of some basic goods as a transitional arrangement.
234.
I, therefore, propose that we continue to facilitate, over the short
term,
the uninterrupted importation and availability of basic goods in our
markets
by individuals and corporates.
235. This will be reviewed taking account
of developments and improvement in
domestic industrial capacity
utilisation.
Export Bank
236. The establishment of an Export Bank
to support all the productive
sectors venturing into export markets has
become necessary given our drive
on increasing our export earnings and
rendering the whole country an export
zone.
237. Initiatives will,
therefore, be instituted by the Reserve Bank in
partnership with external
parties expert in this area.
Mining
238. Government acknowledges
the role of mining in support of the country's
efforts to attract improved
inflows of foreign exchange through exporting as
well as foreign investor
participation.
239. Central to the recovery of mining operations will be
restoration of
their viability. This will enable mining houses to meet
operational costs,
and allow for expenditures for production
expansion.
240. Furthermore, improved exploration, value addition,
supported by a
consistent policy framework that offers incentives to the
mining sector as
well as plugging of leakages will all be
critical.
241. Mr Speaker Sir, the depressed global metal prices are also
posing a
challenge to the mining sector and hence, it is necessary that
Government
institutes measures to assist mines minimise losses.
242.
It is also critical that we support the resuscitation of mining
production,
by facilitating producers' access to foreign currency to enable
them to
recapitalise, buy inputs and invest in exploration of new resources.
243.
I, therefore, propose the measures in support of the resumption and
increased capacity utilisation in mines, including gold.
Viability
& Capitalisation
244. The Reserve Bank is reviewing support to the
mining sector, allowing
for easier access to foreign exchange, and thereby
supporting
recapitalisation, purchase of inputs and provision of working
capital.
245. Furthermore, foreign currency sales to the Reserve Bank
will be at a
market determined exchange rate.
246. Government,
through the Reserve Bank, will also facilitate negotiations
for external
financial facilities by mines, including gold, on the back of
future
production.
247. Levels of Minerals Marketing Corporation of Zimbabwe
(MMCZ) commission,
royalties and other levies will be reviewed in
consultation with the
relevant stakeholders.
Gold
Resuscitation
248. There are some initiatives that the Reserve Bank is
working on to
assist the gold sector.
249. The Governor of the
Reserve Bank will be unveiling the detailed
framework under this critical
sector.
Exploration
250. Mr Speaker Sir, in the difficult economic
environment, very limited
exploration activities have been undertaken, with
few new Exclusive
Exploration Orders issued. This, needs to be addressed, to
avoid
compromising future mineral production.
251. Government is also
setting up a Zimbabwe Exploration Corporation
dedicated to mineral
exploration and assessing the potential of the various
mineral
deposits.
252. This, Mr Speaker Sir, will assist us in evaluating
potential
investments to exploit our mineral deposits.
Value
Addition
253. Furthermore, exportation of unprocessed mineral deposits is
being
suspended in support of greater beneficiation.
254. This
includes current exportation of chrome ore in its raw form, scrap
metal,
among others.
255. Furthermore, the issuance of export permits for scrap
metal, is now
rationalised and restricted to one Authority, namely, the
Ministry of
Industry and International Trade. All such other authorities
are, therefore,
invalidated.
Reserve Assets
256. Mr Speaker
Sir, in light of major leakages being experienced in mining,
Government has
reclassified diamonds, emeralds, and platinum as reserve
assets, alongside
gold.
257. In this regard, the management of diamonds, emeralds and
platinum will
be through the Reserve Bank.
Skills
Training
258. Mr Speaker Sir, enhancing the potential of mining would
also require
that we capacitate the University of Zimbabwe and the School of
Mines.
259. Failure will have adverse effects on domestic skills
availability,
forcing the industry to rely on external technical
expertise.
Plugging Leakages
260. Government will also adopt
stiffer penalties, as part of the measures
to support plugging of leakages
through externalisation.
Public Enterprises & Companies with
Government Shareholding
Capitalisation
261. While Government has
full ownership and control of public enterprises,
the financial and economic
benefits arising from this shareholding have
often been low, owing to under
performance of these entities. Currently, one
of the major challenges
compromising efficient service delivery emanates
from their
under-capitalisation.
262. Given current Budgetary resource constraints,
there is scope for
tapping the large potential resource base through
selective listing on the
stock exchange as well as targeted friendly direct
foreign investor
participation on a joint venture basis.
263.
Significant equity anchored joint ventures with competent consortia of
foreign and local partners would raise financial and technical resources for
investment in expansion, improved efficiency and reliability, as well as
liquidating outstanding and current obligations.
264. The Framework
for the re-capitalisation of such entities as the Cold
Storage Company,
ZESA, Air Zimbabwe, National Railways of Zimbabwe (NRZ), as
well as
telecommunication companies Tel-One and Net-One, is being developed.
This
will also apply to companies in which Government has significant
shareholding, such as Hwange Colliery, and the Zimbabwe Iron and Steel
Company (ZISCO).
265. Given that these entities have Government
shareholding, it will be
necessary that provision be made to facilitate the
participation of other
investors, also allowing for possible debt
restructuring.
266. Where Government has identified an enterprise and
taken the decision
for joint venture investment with strategic partners, the
implementation
modalities of such investment will reside beyond the Minister
responsible
for administering its legislation.
Asset
Disposal
267. In the disposal of identified assets, bids from potential
joint venture
partners and other investors would be evaluated using
international best
practices.
Governance
268. With regards to
support for good corporate governance, I will be
proposing legislation
providing for greater role clarity and accountability
of boards and
management through a Public Finance Management Bill.
269. In the interim,
all Public Enterprises boards are now required to
institute the necessary
arrangements to ensure that key posts are manned by
substantive personnel
with the requisite skills and competencies.
Companies with Government
Shareholding
270. Mr Speaker Sir, Government has some significant
investments and
shareholding in a number of companies other than public
enterprises.
271. Regrettably, most of them have not been contributing to
Government
revenue by way of dividends. Instead some of them have been
operating with
expectation of further handouts from the tax-payer, extending
Government
exposure beyond its shareholding.
272. I, therefore,
propose to tighten the requirements for all companies in
which Government
has shareholding to pay dividends. In this regard, the
Accountant General
has been directed to work out the necessary arrangements
with the respective
company Boards and Management.
Shareholding in Listed
Companies
273. Government shareholding in listed non strategic companies
also offers
scope to mobilise foreign currency resources for the
country.
274. This also has the potential to promote economic
empowerment, as well as
enhance private sector growth, whilst allowing
Government to devote its
resources to strategic parastatals and provision of
essential social goods
and services.
Infrastructure
Development
275. Government efforts in infrastructure rehabilitation and
development in
such sectors as power generation, road and dam construction
as well as water
infrastructure offer scope for not only supporting
productive sectors but
also stimulating economic activities and generate
more employment.
276. Given Budget resource co nstraints, there are
opportunities for
enlisting the participation of credible private investors,
some of whom have
already expressed interest to complement Government
efforts through joint
ventures under the Built Operate Transfer/Built Own
Operate Transfer
(BOT/BOOT) arrangements.
277. Mr Speaker Sir, some
potential infrastructure investment projects have
failed to take off on
account of such issues as consensus over tariffs,
water rights and
shareholding, among others. Government will, therefore, be
engaging
investors as well as structuring appropriate incentives and other
measures
that guarantee viability of identified projects.
278. Notable sectors and
projects identified for implementation under
BOT/BOOT arrangements include
the following:
Roads and Railways
. Harare - Beitbridge road
dualisation;
. Harare - Chitungwiza railway line.
Electricity
Generation
. Expansion of Kariba Power Station;
. Expansion of
Hwange Power Station.
Water & Irrigation
. Construction of
Kunzvi, Tokwe-Mukosi, Biri and Gwayi-Shangani dams;
. Expansion and
construction of irrigation schemes such as Middle Sabi,
Nuanetsi, Wenimbi,
Osbourne, Manyuchi and Dande.
Telecommunications
. Network
expansion and upgrading.
Government Buildings & Housing
.
Construction of houses;
. Maintenance of Government
buildings.
Iron & Steel Making
. Refurbishment of
ZISCO.
Toll Gates
279. Mr Speaker Sir, notwithstanding that
Government has already taken the
decision to install toll gates as part of
the efforts to provide for the
resources necessary to maintain and upgrade
our national road
infrastructure, implementation has remained mired in
bureaucratic inertia.
280. The Zimbabwe Revenue Authority is, therefore,
now directed to set up
rudimentary Toll gate structures to facilitate the
collection of toll fees
along our major highways as from 1 March
2009.
281. The payable Toll gate rates will be as follows:
. Motor
cycles US$1.00
. Passenger vehicles & light trucks US$2.00
.
Minibuses US$3.00
. Buses US$5.00
. Heavy Trucks US$7.00
.
Haulage Trucks US$10.00
282. The Programme will initially target our
inter-city national highways.
In this regard, ZIMRA will be communicating
with the general public the
various designated sites where Toll gates will
be installed.
Production of Vehicle Number Plates
283. Mr Speaker
Sir, the vehicle number plates which used to be produced
locally are now
wholly imported from outside the country with only the
inscription of
numbers done locally. This, in an environment where the
country is
experiencing foreign currency constraints is not sustainable.
284. I,
therefore, propose that the production of number plates for vehicle
registration be done locally as was the situation before. This measure takes
effect from 1 March 2009.
Change of Vehicle Ownership
285. Mr
Speaker Sir, the previous vehicle registration system tied the
number plate
specifically to the vehicle, even in situations where a vehicle
changed
ownership.
286. Under the current system, vehicle number plates are now
specific to the
owner to the extent that if they lose the number plates for
the same
vehicle, a new set has to be acquired. Similarly, in cases where
vehicle
ownership changes, a new set of number plates is also
required.
287. Hence, the current system entails that if one piece of the
set of
number plates is lost, a new set of number plates with totally
different
numbers is required, a situation resulting in a waste of scarce
foreign
exchange resources.
288. With immediate effect, the Central
Vehicle Registry will allow upon
change of ownership, the same number plates
to be transferred to the new
owner. This only applies to the newly
introduced alpha numeric number
plates.
Vehicle
Registration
289. Mr Speaker Sir, while the Central Vehicle Registry is
the sole vehicle
registration authority, it has appointed ZIMRA, City of
Harare, City of
Bulawayo and Zimpost as vehicle registration
agencies.
290. Hence, the registration of new vehicles is currently
carried out by the
above agencies, a situation that has often compromised
the security of the
vehicle registration system as well as payment of the
relevant registration
and licensing fees.
291. Cases of registration
of vehicles that would have been smuggled into
the country, as well as
tampering with the registration books have been
experienced.
292.
While the registration of vehicles and change of ownership remains the
responsibility of the Central Vehicle Registry (CVR), collection of fees and
other taxes associated with vehicle registration is paramount.
293. I
have, therefore, directed ZIMRA to engage the CVR to work out
measures to
plug loopholes associated with collection of fees and other
taxes on vehicle
registration. Once modalities are in place, I will be
communicating the
necessary review mechanism.
294. Furthermore, the CVR should take
advantage of the existing provincial
Vehicle Inspectorate Department offices
to widen their accessibility.
Health Services Delivery
295. The
health sector is faced with a number of challenges which require
substantial
amounts of Government funding.
296. Current estimates indicate that about
US$250 million is required to
restore health services. The bulk of this
contribution would come from
Government, with user fees anticipated to
contribute initially only about
5%.
297. This, Mr Speaker Sir, would
have to be complemented by further review
of fees and charges.
Health
Personnel
298. The health personnel remain covered by the general
Government
remuneration policy framework.
299. This is without
prejudice to tailor-made top-up special allowances,
such as those applicable
under the cholera control programmes.
Health Infrastructure
300. A
number of health infrastructure projects have remained uncompleted
for a
long time, owing to resource constraints.
301. Government, therefore,
proposes prioritising completion of unfinished
projects before embarking on
new ones. This ensures that the country gets
value for money from its
programmes and projects.
Indiscipline & Corruption
302. There
is a notable general rise in corruption and indiscipline in both
the public
and private sectors, which are frustrating economic turnaround
efforts. The
prevailing shortages of goods and services associated with low
production
are also contributing to the rise in corruption cases.
303. Whilst this
Budget is addressing challenges on supply constraints,
Government, has also
considered stiffer penalties to decisively deal with
such
malpractices.
304. I am, therefore, proposing the following standard
scale of fines:
Standard Scale of fines
Level Current fine
(Z$) Proposed fine (US$)
1
5 5
2
10 10
3
20 20
4
50 100
5
100 200
6
200 300
7
300 400
8
400 500
9
500 600
10
600 700
11
900 1 000
12 1
000 2 000
13 2
000 3 000
14 5
000 5 000
305. Furthermore, I propose
that the Minister of Finance assumes the
responsibility of reviewing the
standard scale of fines in consultation with
line Ministries.
306.
This measure takes effect from 30 January 2009.
EXPENDITURE
PROPOSALS
307. Mr Speaker Sir, I have already alluded to the negative
impact of the
entrenched inflationary tendencies on the economy in general
and the
Zimbabwe dollar in particular. This has necessitated the adoption of
multiple currencies to anchor our transactions.
308. In this regard,
the 2009 Budget Estimates are being presented in
Zimbabwe dollars, the
United States dollar and the South African rand. The
prevailing United
Nations exchange rate has been used to compute the local
currency
values.
Level Current fine (Z$) Proposed fine (US$)
309. Mr
Speaker Sir, tabling the 2009 Budget Estimates in both the
Zimbabwean dollar
and selected foreign currencies will facilitate
expenditure transactions
during 2009, which will be on the basis of strict
budget allocations, in
line with available foreign currency revenue
receipts.
310. The
Secretary to the Treasury will be communicating with Ministries on
the
necessary details, including guidance on treatment of transactions and
the
accounting procedures thereof.
Expenditure Bids
311. Mr Speaker
Sir, in light of the use of multiple currencies in
transactions, along side
the Zimbabwe dollar, Ministries costed and
presented their expenditure bids
in foreign currency.
312. Mr Speaker Sir, the level of the expenditure
bids by Ministries were,
in most cases, at unsustainably high
levels.
Estimates of Expenditure Proposals
313. Mr Speaker Sir, I
have had to rationalise the requirements by line
Ministries in line with the
anticipated foreign exchange revenues, which are
projected at $59.5
quintillion (US$1.7 billion) for the 2009 financial year
without any deficit
provisions.
314. Mr Speaker Sir, I therefore propose a total 2009 Budget
of $66.5
quintillion (US$1.9 billion), comprising $50.75 quintillion
(US$1.45
billion) recurrent expenditure and $15.75 quintillion (US$0.45
billion)
capital expenditure.
315. The above Budget provision
includes an amount of $7 quintillion (US$200
million), being resources
already committed by cooperating partners which
are earmarked for specific
programmes. Such resources will be accounted for
as the Vote of
Credit.
316. Mr Speaker Sir, allow me, therefore, to now highlight to
Honourable
Members components of the Budget Expenditure
Proposals.
Employment Costs
317. The proposed 2009 Budget
Provision for the overall employment costs
comprising the wage bill, pension
as well as medical aid insurance,
therefore, amounts to $16.9 quintillion
(US$482.8 million).
Government Wage Bill
318. Mr Speaker Sir,
taking into account the remuneration framework I have
highlighted earlier,
which takes into account the need to introduce payment
in foreign currency,
I have made provision for an amount of $12.67
quintillion (US$361.9 million)
for the wage bill.
Government Pensions
319. Mr Speaker, Sir,
Government has an obligation to address the welfare of
its former employees
who are now pensioners. This group would need, to the
extent possible, to be
looked after through payment of their due pension
benefits.
320.
However, the developments regarding loss of value of our local currency
have
left our pensioners, just like the serving members, with no coping
mechanisms for sustenance.
321. Therefore, Mr Speaker Sir, as we were
reviewing the remuneration
framework for public servants, Government has
also paid attention to pension
benefits.
322. However, the challenge
at present is that foreign currency revenues are
projected to start very low
during the first quarter of the year. Therefore,
actual pension payment
modalities will be worked out in due course.
Public Services Medical
Aid
323. Mr Speaker Sir, Honourable Members will be aware that the
liberalisation of the foreign exchange market has imposed some challenges
across the board, with medical insurance affected as well. A situation now
prevails whereby, without foreign currency subscriptions, medical aid
societies are unable to meet claims by service providers, since the latter
are charging in foreign currency.
324. In light of the above, and as
an interim measure to guarantee basic
cover for Government employees, I
propose to allocate $87.5 quadrillion
(US$2.5 million) towards employer
contribution to the Premier Service
Medical Aid Society.
325. This
amount covers 100% of foreign currency contribution due from both
the
employer and employee, given the low capacity for civil servants to meet
full foreign currency contribution.
Members will, however, be
required to meet the full local currency
component.
Operations &
Maintenance
326. Mr Speaker Sir, for operational requirements including
office running
expenses, stationary supplies and other necessities, I
propose to allocate
an amount of $17.96 quintillion (US$513
million).
327. This amount covers line Ministries and their Departments
as well as
institutions funded through grants from the fiscus such as the
Sports and
Recreation Commission, the Consumer Council of Zimbabwe and
universities.
Social Protection
328. Mr Speaker Sir, our human
development indicators have continued to
deteriorate on account of depressed
economic performance.
329. This has increased the number of vulnerable
groups requiring Government
assistance.
330. Mr Speaker Sir,
Government, is reviewing the levels of support under
the various existing
social protection programmes such as the Basic
Education Assistance Module
(BEAM), Public Health Assistance, Public Works
and Children in difficult
circumstances, among others.
331. I am, therefore, proposing to allocate
$1.87 quintillion (US$53.5
million) under the social protection
programmes.
Education and Health
332. Mr Speaker Sir, I have
alluded earlier to the negative impact that
inflation has had on provision
of education and health services.
333. Inflation has not only eroded
incomes of our teachers, lecturers and
health personnel but also contributed
to inadequate teaching materials,
medicines and drugs as well as
deterioration in facilities and
infrastructure.
334. Therefore, it is
imperative that measures aimed at fighting inflation
are put in place to
complement the following allocations.
Education
335. Mr Speaker
Sir, it is critical that we urgently address the challenges
afflicting the
education sector as they threaten to reverse and undermine
the gains made
thus far.
336. To this end, I propose to allocate an amount of $5.2
quintillion
(US$149.8 million) to the Ministry of Education, Sport and
Culture.
337. I have set aside an amount of $378.9 quadrillion (US$10.8
million)
under this Ministry for the construction and rehabilitation of
schools.
The aim is to phase out hot sitting and improve access,
especially in the
newly resettled areas.
338. I also propose to set
aside an amount of $1.6 quintillion (US$46.1
million) for the procurement of
teaching, learning materials and equipment.
An amount of $103.7 quadrillion
(US$2.96 million) is also being set aside to
facilitate supervision of
schools by enhancing mobility of Education
Officers while setting aside an
amount of $221.57 quadrillion (US$6.33
million) for in-service training for
school heads.
339. The integrity of our public examinations has recently
come under
spotlight following delays in their setting, conduct and
marking.
340. Therefore, to improve and restore confidence, an amount of
$592.39
quadrillion (US$16.9 million) is proposed under the Zimbabwe Schools
Examination Council (ZIMSEC) for this purpose. This amount will be
supplemented by additional income from examination fees, which will be
reviewed upwards with effect from this year.
Tertiary
Institutions
341. Mr Speaker Sir, our institutions of higher learning
have also faced
challenges relating to staff retention, shortage of teaching
and learning
materials as well as general support services.
342. In
an effort to turn around tertiary learning, I propose to allocate an
amount
of $1.1 quintillion (US$29.9 million) for state universities,
comprising
$437.5 quadrillion (US$12.5 million) for recurrent expenditure
requirements
and $609 quadrillion (US$17.4 million) for capital projects,
including
teaching and learning equipment.
343. I also propose to allocate $437.2
quadrillion (US$12.5 million) for the
thirteen Teachers' Training colleges
and ten Polytechnics, mainly focusing
on operational
requirements.
344. The provision under Higher and Tertiary Education also
caters for $175
quadrillion (US$5 million) in support of students under the
National
Education Training Fund, including targeted students under the
Cadetship
programmes.
Health
345. Mr Speaker Sir, adequate
provision of drugs and other medical supplies,
equipment, ambulances and
service vehicles, including attraction and
retention of staff, are critical
success factors in the delivery of health
services.
346. In this
regard, I therefore propose to allocate $5.52 quintillion
(US$157.8 million)
to the Ministry of Health and Child Welfare.
347. Of this amount, $2.1
quintillion (US$59.9 million) is targeted at
Government central, provincial
and district hospitals as well as rural
health centres. In this allocation,
60% caters for the procurement of drugs
and medical supplies while the
balance stands for general running expenses
for these
institutions.
348. With this allocation, it is my expectation that our
health institutions
will now be able to have improved levels of essential
and necessary drugs
including other medical
supplies.
Drugs
349. To improve and strengthen the referral
system, I propose to set aside
$759.5 quadrillion (US$21.7 million) for the
procurement of drugs and other
medical supplies for local authorities and
mission hospitals and clinics.
350. In order to increase NatPharm's
capacity to support the health sector
through the supply of drugs and
medical resources, I have made a special
allocation of $568.75 quadrillion
(US$16.25 million) for its capitalisation.
Equipment
351. In
addition, I have set aside an amount of $141.2 quadrillion (US$4
million)
for procurement of sixty-one ambulances and eighty service
vehicles.
Health Infrastructure
352. Mr. Speaker Sir, our
health infrastructure such as boilers and steam
reticulation systems as well
as laundry equipment continues to deteriorate
due to lack of adequate
maintenance and age.
353. Mr Speaker Sir, mindful of our resource
constraints and also taking
into account, challenges in technical and
supervisory capacity, we have,
however, taken a deliberate stance to limit
the number of health sector
projects this year's Budget takes on
board.
354. I, therefore, propose to allocate an amount of $231
quadrillion (US$6.6
million) for urgent rehabilitation works at Harare,
Mpilo, United Bulawayo
Hospital and Chitungwiza Central
Hospitals.
355. Furthermore, an amount of $315.6 quadrillion (US$9
million) has been
set aside for ongoing construction works. Included in this
allocation is
works on two provincial hospitals ($2.63 quadrillion), five
district
hospitals ($31.57 quadrillion) and three rural health service
centres ($42
quadrillion).
Agriculture
Support Towards Grain
Production
356. Mr. Speaker Sir, as I have indicated earlier on,
Government efforts
will now be directed towards rebuilding of the national
strategic grain
reserves, extension services to all farmers as well as
supporting communal
farmers.
357. To this effect resources amounting
to $280 quadrillion (US$8 million)
have been set aside to support grain
production for the Communal, A1 and the
newly Resettled farmers.
358.
The support will be in the form of subsidised inputs targeting 300 000
ha
with expected yield of 500 000 metric tonnes. Support will also be
extended
to the vulnerable groups through provision of inputs comprising
10kg grain
seed; 50kg compound D and 50kg ammonium nitrate.
359. To facilitate
achievement of the set production levels, resources
amounting to $240.1
quadrillion (US$6.9 million) have been set aside to
strengthen extension
services and monitoring of the programme through
Agritex.
360. I also
propose to allocate $175 quadrillion (US$5 million) to cover
importation of
grain up to the next harvest.
Tobacco Production
361. The land
reform programme saw a shift to tobacco production by the
newly resettled
farmers. It has therefore become necessary to unlock this
production
potential through provision of working capital targeting about 25
000
hectares. Resources amounting to $105 quadrillion (US$3 million) have
thus
been set-aside for this purpose.
Livestock Production
362. Mr
Speaker Sir, I propose to allocate an amount of $56 quadrillion
(US$1.6
million) towards the Rebuilding of the National Herd Programme.
363. This
programme, which involves the procurement of bulls, cows and
artificial
insemination will be implemented through Agribank, agricultural
colleges,
the Cold Storage Company and the Agriculture Rural Development
Authority
(ARDA).
364. Alongside the livestock-rebuilding programme, Government is
also making
resources available for enhancement of veterinary services
including
procurement of vaccines and dipping chemicals for the prevention
of animal
disease outbreaks under the Animal Disease and Risk Management
Programme.
Other Capital Projects
365. Mr Speaker Sir, as I have
indicated earlier on, our roads, water and
sewerage systems in particular
have gone beyond their economic life span
and, therefore, require
rehabilitation and maintenance.
366. Taking account of these constraints
and working with implementing
agencies, I have had to scale down the number
of projects to manageable
levels. Therefore, out of a total stock of 1 705
public sector projects that
Ministries proposed to implement, I have made
provision amounting to $12.4
quintillion (US$354.6 million) to cater for
only 594 projects.
Roads and Bridges
367. Mr. Speaker Sir, I am
proposing to allocate an amount of $2.1
quintillion (US$59.3 million)
covering construction and rehabilitation of
our road network.
368. An
amount of $362.5 quadrillion (US$7.5 million) is being set aside for
dualisation of Harare-Masvingo, Harare-Bulawayo and Masvingo-Beitbridge
roads.
369. For construction of major roads, I have allocated $350
quadrillion
(US$10 million) for ongoing construction works. Of this amount,
$63
quadrillion (US$1.8 million) is targeted at the completion of the
construction of Bindura - Shamva road while $287 quadrillion (US$8.2
million) covers further works on five high volume roads.
370. A
specific amount of $1.3 quintillion (US$36.2 million) is proposed for
resealing of eight roads and re-gravelling of thirteen roads in the
country's
ten provinces.
371. For the construction and rehabilitation
of rural roads, I propose to
allocate $175 quadrillion (US$5 million) under
the District Development Fund
(DDF).
Toll gates
372. Mr
Speaker Sir, in order to kick start the establishment of toll gates
on all
our major road networks, I have, therefore, allocated $70 quadrillion
(US$2
million) for the construction of appropriate structures.
Water and
Sanitation
373. Mr Speaker Sir, water supply and sanitation management in
both rural
and urban areas remain a challenge in terms of supporting
business
activities as well as access to clean water by the general
public.
374. To address the water and sewer challenges, I am proposing to
set aside
an amount of $1.1 quintillion (US$31.2 million) for water and
sewer
provision in both urban and rural areas.
Urban Water Supply
& Sanitation
Harare
375. In line with the decision to transfer
the function of water and sewer
management from ZINWA to local authorities,
I propose to allocate an amount
of $451.5 quadrillion (US$12.9 million) to
Harare City Council.
376. This amount will cover desludging of sewer
tanks, installation of pumps
and rehabilitation of equipment at Firle,
Crowborough and Zengeza sewer
treatment works as well as pipe replacement in
some residential areas.
377. To improve water pumping and distribution
capacity for Harare and its
environs, I propose to allocate an amount of
$150.5 quadrillion (US$4.3
million) to cater for upgrading works at Morton
Jaffray Water works as well
as $35 quadrillion (US$1 million) for pipe
replacement.
Bulawayo
378. Mr Speaker Sir, I am aware that the
City of Bulawayo has had perennial
water challenges. The construction of the
Mtshabezi Pipeline, which would
have supplied to the city, is taking long to
complete.
379. Therefore, to enhance water supply to the city, for the
time being, I
am proposing to allocate an amount of $4.73 quadrillion
(US$135 000) for the
rehabilitation of boreholes and upgrading of the
treatment works.
Other Urban Local Authorities
380. For the other
urban sewer and water supply schemes around the country I
propose to
allocate an amount of $23.45 quadrillion (US$670 000) to cater
for the
following cities and towns:-
Town Project Name 2009
Provision
Mutare Chikanga reservoir $2.45 quadrillion
Mutare
outfall sewer $5.78 quadrillion
Gimboki Phase 3 extension $3.33
quadrillion
Gweru Gweru City Water Supply $3.5 quadrillion
Gweru
City Sewage Rehabilitation $3.5 quadrillion
Marondera Marondera Water
Supply $3.5 quadrillion
Chinhoyi Chinhoyi Clear Water $700
trillion
Chinhoyi Fernlea Sewage Station $700 trillion
381. To
augment the above allocations, the responsible authorities will
raise
additional revenues through charging of cost reflective tariffs to
allow
them to re-invest in equipment and the conveyance system
maintenance.
Waste Management
382. Mr Speaker Sir, the recent
outbreak of cholera has brought to the fore,
challenges relating to waste
management in most of our urban areas.
383. The shortage of financial
resources, fuel and refuse removal equipment
has led to local authorities
leaving refuse uncollected, thereby creating
unhygienic conditions which
promote the spread of diseases.
384. Whilst the Budget will make
provision of $175 quadrillion (US$5
million) to address some of these
challenges, the local authorities will
come up with specific tariffs for
targeted services.
Rural Water & Sanitation Programme
385. To
cover for the provision of clean water in our rural areas, I propose
to
allocate an amount of $598.5 quadrillion (US$10.57 million) under the
Rural
Capital Development Fund. This amount will cater for the
rehabilitation of
about 9 000 boreholes and sanitation facilities throughout
the
country.
386. In addition, I propose to allocate an amount of $12.6
quadrillion
(US$360 000) to DDF for the drilling of an additional 10
boreholes in each
province.
Airports
387. Mr Speaker Sir, the
rehabilitation of Harare, Victoria Falls and J.M.
Nkomo airports, as well as
upgrading the Buffalo Range Airport are critical
to facilitate traffic as
well as tourism targeting the 2010 World Cup in
South Africa.
388. I,
therefore, propose to allocate an amount of $126 quadrillion (US$3.6
million) for on-going works under these airport projects. This will cover
rehabilitation of the runway and sewer upgrading works at Harare Airport and
procurement of baggage handling equipment, car park, access road and other
finishes at J.M. Nkomo Airport.
389. It is important for the Airports
Authority to take full advantage of
the interest shown by some investors in
the upgrading of our airport
infrastructure particularly the Victoria Falls
Airport.
Dam Construction and Irrigation Development
390. Mr
Speaker Sir, agricultural production stands to improve, if we are to
increase irrigation capacity, taking full advantage of existing water bodies
as well as complete the dams currently under construction.
391. I
have already indicated above infrastructural projects including dams
which
have potential for attracting joint venture capital with the private
sector.
392. In addition to the above, I have prioritised Bubi-Lupane
and Mutange
dams and allocated $224 quadrillion (US$6.4 million) to
facilitate their
completion.
393. Of the existing large dams, work to
complete water conveyance and
infield works will be speeded up to enable
full utilisation of the water
resources for agricultural
production.
394. In this regard, Government has prioritised the expansion
of irrigation
schemes on dams in various districts. (See Annex
3).
Energy
395. Mr Speaker Sir, the country requires urgent
rehabilitation and
expansion of electricity generating projects in order to
support our
productive sectors.
396. Government has already taken the
stance to review electricity tariffs
to economic levels, thereby enhancing
resources to finance power utility
operations.
397. In order to
augment the above, I accordingly propose to allocate $227.5
quadrillion
(US$6.5 million) for ZESA for the procurement of critical spares
and
consumables, refurbishment of generation facilities including Hwange
Thermal
Power Station, rehabilitation of transmission networks.
Rural
Electrification
398. Mr Speaker Sir, our Rural Electrification Programme
is an initiative
geared towards empowering rural communities to enhance
their productive
capacity as well as their standards of living.
399.
The Rural Electrification Programme continues to pursue the extension
of the
grid as well as coordinate end use infrastructure development.
400. The
proposed Budget of $147 quadrillion (US$4.2 million), therefore,
targets
five (5) grid extension projects and some end use infrastructure
projects
while provision has also been made for mini-grid solar systems.
401. The
end use infrastructure projects include grinding mills, cottage
industries
and irrigation schemes.
Institutional & Office
Accommodation
402. A number of Government institutional and office
buildings are under
construction. Resource constraints have delayed
completion of these
projects, necessitating a targeted approach in
allocating resources.
403. I am, therefore, proposing to allocate
resources to the following
prioritised projects: -
Project Local
Currency
(Quadrillions) US$ (millions)
Central Registry 105.0
3.00
Interpol Regional Office 17.5 0.50
Lupane Composite Office
Block 33.8 0.96
5 District Registry Offices Central Investigation
Department Headquarters
16.3 0.46
Zimbabwe Defence Forces' 38.5
1.10
Institutional accommodation 59.5 1.70
Chinhoyi & Gwanda
Magistrates courts 122.5 3.50
Beitbridge Redevelopment Projects 115.5
3.30
Maintenance
404. Mr Speaker Sir, maintenance of Government
infrastructure particularly
public buildings remains an area of great
concern. Given the
hyper-inflationary environment, much of the planned
maintenance work had
been inadequately funded.
405. In addition,
concerns have been raised about the capacity of the Public
Works Department
to undertake and supervise maintenance works given flight
of its workforce
especially engineers and artisans.
406. Taking cognisance of the need to
restore the value and improve the
operating environment of public buildings
I propose an allocation of $173.9
quadrillion (US$4.97 million) towards the
maintenance of public buildings.
407. This amount is shared between the
Ministries of Local Government,
Public Works and Urban Development $103.6
quadrillion (US$2.96 million) for
urban infrastructure and that of Rural
Housing and Social Amenities $70.3
quadrillion (US$2 million) for rural
infrastructure.
Cooperating Partners
408. Mr Speaker Sir, I have
also taken into account limited financial
support from cooperating partners
in a number of ongoing projects in the
areas of food security, health,
education, among others.
409. This is estimated to mobilise financial
support to the tune of US$200
million.
REVENUE PROPOSALS
2009
Revenue Projections
410. Mr Speaker Sir, cognisant of the current poor
level of economic
performance, the revenue generation challenge that we face
can only be
overcome by taking advantage of our economy's huge potential,
which the
policy measures that I am proposing are meant to realise during
2009.
411. The 2009 Budget revenue estimates I am tabling, therefore,
require that
we successfully implement comprehensive and mutually
reinforcing
macro-economic reforms, including the removal of all price
distortions and
controls which though noble in their intentions have had the
unintended
consequences of hampering production while not helping the
intended
beneficiaries.
412. It is in light of this that I have also
proposed fundamental macro and
micro economic reforms encompassing fiscal,
monetary and exchange reforms,
structural, pricing as well as legal and
institutional reforms, targeted at
stimulating positive supply
response.
413. Taking account of the above, I am tabling the 2009 Budget
Estimates
providing for Revenues amounting to US$1.7 billion, being the
potential
realisable collections as we implement essential economic reforms
backed up
by the necessary political will. Astute technocratic
implementation and
time-bound monitoring framework will also be
critical.
414. Mr Speaker, Sir, the above revenue estimates are also
premised on
strengthening revenue collection, embracing into the Budget
revenue net
those currently evading tax in the informal sector. This
requires efficient
administration that enhances tax compliance.
415.
Mr Speaker Sir, allow me to present the anticipated performance of the
respective revenue heads.
Foreign Exchange Tax Measures
416.
Mr Speaker Sir, to meet the operational costs of Government including
the
new Remuneration Framework, it will be necessary that we introduce a
number
of tax measures targeted at mobilising resources in both local and
foreign
currency.
417. In this regard, the 2009 Budget proposes measures to
broaden the
collection of some of the tax revenue in foreign
currency.
Remittances in Foreign Currency
Corporate Profit
Tax
418. Mr Speaker Sir, corporate profit tax is currently payable in
local
currency, except in instances where the holder of a special mining
lease has
elected to maintain all books and records relating to the special
mining
lease operation in foreign currency. However, most companies now
conduct
business in foreign currency, hence realise profits in the same
currency.
419. I, therefore, propose that corporate tax be remitted in
the currency in
which business is conducted with effect from 1 January
2009.
Value Added Tax (VAT)
420. The VAT legislation provides that
where payment for supplies of goods
and services is in foreign currency, VAT
should also be payable in foreign
currency. However, upon importation VAT is
payable in local currency. VAT
remittances to the fiscus are thus not
commensurate with the volume of
business conducted in foreign
currency.
421. I, therefore, propose that import VAT be payable in
foreign currency on
the value of all imports with effect from 30 January
2009.
Customs Duty
422. Mr Speaker Sir, Customs duty is currently
determined by applying the
duty rate on the foreign currency value of goods
converted to the local
currency using the inter-bank rate. Taxpayers settle
the bulk of their tax
obligations to Government by means of cheque or
electronic transfers using
funds that are in some instances obtained through
parallel market
activities. The value of tax paid to Government is thus
undermined.
423. I, therefore, propose to charge customs duty in foreign
currency on all
imports with effect from 30 January 2009.
Carbon Tax
and NOCZIM Debt Redemption Levy on Fuel
424. Oil Companies currently sell
fuel in foreign currency. However, carbon
tax and NOCZIM Debt redemption
levy is paid in local currency.
425. I propose to levy carbon tax and
NOCZIM Debt redemption levy on fuel in
foreign currency with effect from 30
January 2009. I further propose to
review the rates of customs duty on fuel,
carbon tax and NOCZIM redemption
levy, with effect from 30 January 2009 as
follows:
Tax Head Current Rate Proposed
Rate
Customs Duty 5% of CIF value or 30% of CIF value or Z$236
500 per
litre US16 Cents per litre, which ever is
greater
Carbon Tax Zim 20 cents per litre 5% of CIF
value or US 3
cents per litre, which ever is greater
NOCZIM
Debt Zim 20 cents per litre 5% of CIF value or
US
Redemption 3 cents per litre, whichever is
greater
Total Z$236 500.4 per litre 40% or US 22 Cents per
litre
Excise duty
Clear Beer, Alcoholic Beverages, Cigarettes and
Tobacco
426. Mr Speaker Sir, excise duty on imported and locally produced
clear beer
and alcoholic beverages is payable in local currency. Clear beer
and
alcoholic beverages are however currently traded in foreign
currency.
427. I, therefore, propose to charge excise duty on imported
and locally
produced beer and alcoholic beverages in foreign currency. I
further propose
to levy excise duty on locally produced cigarettes and
tobacco in foreign
currency.
428. The above measure takes effect from
30 January 2009.
Second Hand Motor Vehicles
429. Mr Speaker Sir,
whereas trade in second-hand motor vehicles by
individuals and registered
operators is currently being conducted in foreign
currency, excise duty is
still payable in local currency, thereby depriving
the fiscus of the
much-needed foreign currency.
430. I propose that excise tax on second
hand motor vehicles be collected in
foreign currency with effect from 30
January 2009.
Presumptive Tax
431. Presumptive tax was introduced
to capture the hard to tax informal
sector. The contribution of presumptive
tax to total revenue is however
insignificant due to the impact of
inflation, since presumptive taxes are
paid on a quarterly
basis.
432. The informal sector businesses notably hair salons, driving
schools and
taxicabs are trading in foreign currency.
433. In order
to mitigate loss of revenue to the fiscus, I propose to levy
presumptive
taxes in foreign currency on a quarterly basis with effect from
1 January
2009, as follows:
Driving Schools
. Vehicles used for Class 4
Training - US$500 per vehicle.
. Vehicles used for Classes 1 and 2
Training - US$600 per vehicle.
Haulage Trucks
. Of carrying
capacity of less than 20 tonnes - US$1 000 per vehicle.
. Of carrying
capacity of more than 20 tonnes - US$2 500 per vehicle.
. Combination of
haulage truck trailers of a capacity of 15 - 20 tonnes -
US$2 500 per
vehicle.
Commuter Transport Operators
. Of carrying capacity of 8
- 14 passengers - US$150 per vehicle.
. Of carrying capacity of 15 - 24
passengers - US$200 per vehicle.
. Of carrying capacity of 25 - 36
passengers - US$400 per vehicle.
. Of carrying capacity of 37 passengers
and above- US$650 per vehicle.
Taxi-cab Operators
. US$100 per
vehicle.
Hair Salons
. US$1 500 per salon.
434. Mr Speaker
Sir, it must be noted that presumptive taxes are only levied
in cases where
the businesses do not keep proper books of accounts and pay
their tax
liabilities.
435. The rates are set higher to encourage businesses to
register with ZIMRA
for tax purposes where they consider the presumptive tax
liability is not
reflective of the actual performance of the
business.
Capital Gains Tax and Stamp Duty on Immovable
Properties
436. Property Developers and Real Estate agents sell immovable
property in
foreign currency. However, the capital gains tax and stamp duty
on immovable
properties is payable in local currency.
437. I propose
to levy capital gains tax and stamp duty in foreign currency
where immovable
property is disposed of in the same currency with effect
from 30 January
2009.
Pay As You Earn (PAYE)
438. The Income Tax legislation
provides for payment of PAYE in foreign
currency, where an individual is
remunerated in foreign currency. Tax
payable is determined by converting the
salary into local currency using the
prevailing inter-bank exchange rate and
applying the appropriate tax rates.
439. Use of the inter-bank exchange
rate for purposes of determining the tax
payable has resulted in most
employees earning foreign currency denominated
salaries either being left
outside the tax net or being taxed heavily.
440. This was further
exacerbated by inflexible movement in the inter-bank
exchange rate, which
was not commensurate with the regular review of the
tax-free threshold and
bands.
441. Mr Speaker Sir, in order to enhance the contribution of PAYE
to tax
revenue and also uphold regional best practices in the taxation of
incomes
earned in foreign currency, I propose to introduce separate foreign
currency
tax tables for employees remunerated in foreign currency with
effect from 1
February 2009.
Withholding Tax
Tenders,
Consultancy and Other Services
442. Withholding tax on tenders,
consultancy and other services between
unregistered and registered
businesses is currently paid in local currency.
443. Where transactions
are conducted in foreign currency, I propose that
withholding tax should be
payable in the same currency. This measure will
apply on tenders,
consultancy and other services above US$250 per
transaction with effect from
30 January 2009.
Commercial Imports by Unregistered Traders
444.
Mr. Speaker Sir, withholding tax on commercial imports by unregistered
traders was introduced with a view to enforce payment of taxes by informal
traders.
445. In view of the fact that goods imported by unregistered
traders are
sold in foreign currency, I propose that the withholding tax on
commercial
imports by unregistered traders be paid in foreign currency with
effect from
30 January 2009.
Accelerated Remittance
Periods
VAT
446. VAT is payable within a period of 30-90 days
depending on categories in
which registered traders fall.
447. Due to
inflationary developments and the need to improve cash flow
inflows to
Government, tax remitted after a lapse of 30-90 days loses value.
I,
therefore, propose that VAT payment dates be brought forward to the third
day of the following month with effect from 1 January 2009. The proposed
payment date applies to all registered operators.
PAYE
448.
PAYE is remitted within 15 days of the following month, after
collection.
However, some employers have been remitting PAYE to the fiscus
within the
month of collection.
449. I propose that the time period for remittance
of PAYE be reviewed to
the third day of the following month with effect from
1 January 2009.
Capital Gains Withholding Tax
450. Capital Gains
Withholding tax is levied on sale of immovable
properties. The tax is
collected by conveyancers, legal practitioners and
estate agents and is
remitted within a period of 30 days, from time
recieved.
451. In
order to minimise the loss of value of revenue remitted to the
fiscus, I
propose to review the remittance period to the third day of the
following
month with effect from 1 January 2009.
Value Added Tax Registration
Threshold
452. Due to inflation developments, the current VAT
registration threshold
has declined in value to an extent that micro
businesses are obliged to
register for VAT purposes. This increases the cost
of compliance for small
and medium enterprises and also compromises ZIMRA's
administrative
effectiveness.
453. With effect from 30 January 2009,
I propose to review the VAT
registration threshold to US$60 000 per
annum.
454. This measure does not apply to operators who are already
registered for
VAT purposes.
Motoring Benefits
455. Motoring
benefits that accrue to employees are deemed to be employment
income, which
is grossed up to their salary for purposes of income tax.
456. I propose
to review the deemed motoring benefits, with effect from 1
February 2009, as
follows:
Engine capacity Current Level Proposed
Level
ZW$ US$ per
month
Up to 1 500cc 45 000 50
Over
1500cc not 50 000 60
exceeding 2000cc Over
2000cc
not exceeding 3000cc 70 000 80
Over 3000cc 90 000
100
457. Where the fringe benefit accrues to a taxpayer earning a salary
in
local currency, the deemed income will be converted to local currency
using
the rate at which exporters are paid by the Reserve Bank upon
surrender of
export proceeds.
Tax on Miscellaneous Income Deposits
into Individual & Corporate Accounts
458. Due to illegal parallel
market activities, huge amounts of deposits
have been reflected in both
individual and corporate accounts. This
unproductive income has largely
remained outside the tax net.
459. I propose to introduce a special tax
on funds deposited into individual
and corporate accounts at the highest
marginal tax rate of 40%, with the
tax-free threshold to be determined in
tandem with market developments, with
effect from 1 February
2009.
460. This proposal will not apply to lawful sources of income as
defined in
the Income Tax Act and in incidences where the same income has
already been
subject to tax.
Tax
Incentives
Corporates
Incentives for the Tourism
Sector
461. Mr. Speaker Sir, the tourism sector is a potential foreign
currency
earner, which over the years has continued to decline due to
negative
publicity and perceptions.
462. The 2010 World Cup to be
hosted by South Africa avails an opportunity
for domestic companies to take
advantage of its spill-off effects, hence the
need to intensify programmes
to promote tourism.
463. I, therefore, propose to exempt from duty
capital goods used by
registered tourist service providers that include tour
operators, safari
operators, boat operators and car hire
companies.
464. I further propose to exempt from duty equipment for
expansion,
modernization and renovation of hotels and
restaurants.
465. The above measure takes effect from 1 March
2009.
Capital Allowances
466. Mr. Speaker Sir, capital allowances
provide relief to companies that
invest in staff housing and also purchase
motor vehicles for use by
employees. The value of these allowances has
however diminished to an extent
that they no longer provide the necessary
incentives.
467. I, therefore, propose to review the allowances, with
effect from 1
January 2009, as follows:
. Passenger motor vehicle
allowance - US$10 000.
. Staff housing allowance - US$25
000.
Donations to Schools, Hospitals, Clinics, Research and Development
Institutions
468. In order to encourage corporate social
responsibility by the private
sector, donations to schools, hospitals,
clinics, research and development
institutions, are deductible for tax
purposes.
469. I propose to review the allowable deductions to US$100 000
per annum
with effect from 1 January 2009.
Attendance at
Conventions
470. Mr. Speaker Sir, in order to incentivise companies to
attend trade
conventions so as to market their business, I propose to review
the
deductible allowance to US$2 500 per annum with effect from 1 January
2009.
Tax Relief Measures
Individuals
Tax-free Pension
Contributions
471. The current inflationary environment has adversely
affected the value
of pension contributions, which in the past years have
been an important
tool for mobilising savings and investment
income.
472. In order to maintain the value of pension contributions, I
propose to
peg the maximum deductible monthly pension contribution in
foreign currency
at US$300 with effect from 1 February 2009.
Tax
Credits
473. Mr. Speaker Sir, tax credits provide relief to the elderly,
blind and
physically challenged persons through reduction of tax
liability.
474. In order to assist this category of disadvantaged
taxpayers, I propose
to set the credits at US$75 per month with effect from
1 February 2009.
Retrenchment/Severance Packages
475. The value of
retrenchment packages under the current inflationary
environment has
dwindled to an extent whereby retrenchees are unable to
sustain the
day-to-day living expenses.
476. In order to maintain the value of the
nontaxable portion of
retrenchment packages, I propose to set the minimum
taxfree threshold of the
retrenchment package to US$1 000 or one third of
the retrenchment package,
up to a maximum of US$9 000 with effect from 1
February 2009.
Rental and Investment Income for Elderly
Taxpayers
477. Mr. Speaker, Sir, in support of the welfare of elderly
taxpayers who
rely on rental and investment income, I propose to review the
exempt portion
of proceeds from such income to US$250 per month with effect
from 1 February
2009.
VAT on Mobile Phone Airtime
478. The VAT
rate on mobile phone airtime is currently 22.5%.
479. I propose to
standardise the rate by reducing it to 15% with effect
from 1 February 2009,
in line with the prevailing general level of VAT on
other products. This
should translate into lower mobile phone airtime
tariffs.
Customs
Duty
Customs Duty Suspension on Basic Commodities
480. Customs
duty was suspended on some basic commodities from 10 August
2008 to 31
December 2008 to facilitate importation of basic commodities and
address
shortages on the domestic market.
481. In order to enhance availability
of basic commodities at affordable
prices, whilst allowing local
manufacturers time to resuscitate production,
I propose to extend duty
suspension on basic commodities to 30 June 2009.
Customs Duty in Foreign
Currency
482. Mr. Speaker Sir, I have already proposed that customs duty
be levied in
foreign currency on imported goods. This measure will increase
cost of
importation thereby resulting in uncleared goods piling up in
customs yards.
483. I, therefore, propose to reduce customs duty rates
and remove surtax of
15% which is levied on all products that attract duty
rates of 40% and
above, as follows:-
Product Current rates of customs
Proposed rates of
duty customs duty
Raw materials 0% - 25% 0% -
15%
Intermediate goods 10% - 25% 10% - 15%
Finished
Goods
Clothing and textiles 40% - 60% + US$10/kg 40% +
US$5/kg
Clothing and textiles (school uniforms) 60% + US$10/kg
25%
Footwear 40% + US$5 per pair - 60% 40% + US$5 per
pair
Electrical goods 60% 40%
Alcohol & alcoholic beverages
60% 40%
Cigarettes and tobacco 60% + US$5/1000 40% + US$5/
1000
Motor Vehicles 40% - 80% 25% - 60%
Handbags and other
articles of leather, 60% + US$5/kg 40% + US$5/kg
plastic or textile
material
Fruits and vegetables 40% 25%
484. This measure takes
effect from 1 February 2009.
Travellers' Rebate
485. Individuals
are allowed to import under rebate of duty, goods valued up
to US$300 once
in a calendar month. However, there are no restrictions with
regards to
quantities that individuals may import. As a result, individuals
import
commercial goods for resale under rebate of duty thereby prejudicing
revenue
to the fiscus.
486. In order to minimise loss of revenue to the fiscus, I
propose that the
travellers' rebate be restricted to goods imported for
personal consumption.
The Zimbabwe Revenue Authority will provide guidelines
on goods of a
commercial nature to be excluded from the
rebate.
District Councils' Unit Tax
487. In the rural areas,
district councils' capacity to generate substantial
resources through
various charges and levies, including those on commercial
farming areas, has
deteriorated.
488. In order to raise the revenue base and capacitate our
rural district
councils, I propose empowering Rural District Councils to
enforce the
collection of Unit tax on A1 and A2 farming
communities.
489. This will enable District Councils to raise the
necessary resources for
the restoration of such essential services as road
grading, gully
reclamation, maintenance of schools and clinics, dipping
services, among
others.
490. Mr. Speaker Sir, the poor state of the
rural road network, which has
deteriorated over a number of years due to
inadequate resources, is
currently a major challenge for farmers as they
transport agricultural
inputs and produce.
491. I, therefore, propose
to levy a Unit tax on A1 and A2 farmers in
foreign currency as
follows:
Proposed rates of Unit tax
Natural Region Proposed unit
tax per hectare per annum US$
1 3
2 3
2a 3
2b
3
3 2
4 2
5 1
492. This measure takes effect from 1
January 2009.
Fees and Charges
493. Fees and charges play an
important role in augmenting Budget tax
revenues, which are meant to enhance
service delivery and discipline.
494. Hence, it is necessary to
continuously review these fees and charges
taking account of developments in
the market, in particular increased cost
of service provision.
495.
In the case of fees and charges currently under the jurisdiction of
certain
line Ministries such as fines under Justice, I have already
indicated that
the responsibility for their review will be transferred to
Treasury, though
the administration remains with the respective line
Ministries.
Fees
& Charges Unit
496. I am, therefore, constituting an adequately
manned Unit within the
Ministry of Finance dedicated towards monitoring,
evaluating and reviewing
the structure and level of fees, rentals and
charges by Ministries and
Government Departments on a regular
basis.
497. Mr Speaker Sir, the above measure will ensure timeous review
of all
fees and charges, thereby overcoming delays that are currently being
experienced in line Ministries and departments.
Road Access
Fees
498. The road access fee is levied on local and foreign registered
motor
vehicles at ports of entry. The levy is payable in foreign currency
and
local currency equivalent on foreign and locally registered vehicles,
respectively.
499. The local currency road access fee is however
insignificant due to the
use of the valuation factor, which lags behind the
market rate. As a result,
motorists have experienced delays due to
challenges in accessing the local
currency.
500. I propose a road
access fee of US$10 and US$20 payable by motorists
using locally registered
light and heavy vehicles, respectively.
501. This measure takes effect
from 30 January 2009.
Health Fees
502. Mr Speaker Sir, I have
already given indications of the substantial
amounts of funding requirements
in public health delivery, with user fees
anticipated to contribute
initially only about 5%.
503. Government is, therefore, implementing a
two tier hospital service fee
structure in both local and foreign currency,
with hospitals required to
display both the Zimbabwe Dollar Tariff Fee
Schedule as well as the Foreign
Exchange Tariff Fee Schedule.
504.
The new hospital fee tariffs in foreign exchange are annexed to this
Budget
Statement. (See annexure 1.)
505. The Government hospital local currency
and foreign exchange fee tariffs
will be reviewed by Treasury in line with
economic developments, thereby
gradually reducing Government
contributions.
506. Additional cost recovery measures include
introduction of full cost
recovery for use of private wards at Government
hospitals.
Schools' Tuition & Examination Fees
507. The
prevailing hyper-inflationary environment and the subsequent
introduction of
pricing of goods in both local and foreign currency has
necessitated
Government consideration for charging school fees and levies in
local and
foreign currencies under both Government and non Governmental
schools.
508. With immediate effect, all schools other than primary
schools in both
rural areas and high density suburbs are authorised to
collect tuition and
examination fees as well as levies in both local and
foreign currencies.
509. Rural day primary schools and primary schools in
high density suburbs
will, however, be exempted from tuition and examination
fees but will be
permitted to charge their levies in both local and foreign
currencies.
510. For sustainability of our schools, it is further
proposed that they
offer Technical Vocational subjects, including
Agriculture, in their
Curriculum and also embark on farming activities.
Those without land should,
therefore, apply for it through the relevant
authorities.
Review of Fees
511. The responsibility to regulate
and control school fees and levies,
taking account of economic developments,
reverts back to the Ministry of
Education and away from the National Incomes
and Pricing Commission who are
currently exercising that
responsibility.
512. The National Incomes and Pricing Commission will
focus on monitoring
compliance with Ministry of Education fee approved
levels.
Tertiary Education Fees
513. Mr Speaker Sir, the
expenditure requirements to restore quality
education in our tertiary
institutions make it unavoidable that Government
shares some of the costs of
tertiary education with the parents. This also
improves accountability among
students in universities, polytechnics and
colleges as well as ownership of
the institutions' facilities.
514. Honourable Members will have noted the
many instances where,
surprisingly, even well endowed parents display
inability to pay tertiary
education fees when they were able to get their
children through ordinary
and advanced level education without State
assistance.
Tuition Fees
515. Government has, therefore, approved
the tuition fees and levies for
State Universities, Polytechnics and
Teachers Colleges payable in both local
and foreign currency. (See Annexure
2)
516. The fees schedules were determined on the principles of cost
sharing,
the need to ensure access and equity, the need to retain critical
staff in
institutions of higher learning, the need to promote quality
education and
finally the need to restore Zimbabwe's leading position in the
area of
education and training.
517. To this end, institutions are
required to embark on revenue generating
projects and activities such as
applied research and full utilisation of
land as well as other resources
allocated to them.
518. The intended impact would be improved quality of
education, student
welfare and discipline and refurbishment of
infrastructure and staff
motivation and retention.
Retention
Allowances
519. The approved fees structures would yield additional funds
that will be
used to pay Top-Up Retention Allowances to staff involved in
tertiary
education who would continue to receive their basic pay from
Government.
Cadetship Programme
520. To ensure access and equity,
students at State tertiary institutions
unable to pay fees from their own
means will be considered for support under
the Cadetship Programme,
implemented through the respective Ministries and
Government
departments.
521. Government has, therefore, put in place the necessary
means testing
mechanisms, now drawing on input from both primary and
secondary school
authorities, to improve on reliability of assessments of
students to be
targeted.
Estate Duty
522. Deceased estates are
entitled to a duty exemption on the principal
residential property and one
family vehicle. The estate is also subject to a
tax-free threshold currently
pegged at $25 billion, above which 5% duty is
levied on additional estate
properties.
523. I propose to peg the estate duty tax-free threshold to
US$50 000 with
effect from 1 February 2009.
DOMESTIC DEBT
524.
In 2008 the Government raised domestic debt to finance operations
through
one year Treasury Bills and Insurance Industry Bonds.
525. Mr Speaker
Sir, I have alluded to the fact that our revenues during
2008 were
significantly higher than our expenditures.
526. I, therefore, propose
that the full amount of the domestic debt of $5
500 quintillion be redeemed
with immediate effect to give some valuable
return to investors in this
hyper-inflationary economic environment.
CONCLUSION
527. Mr
Speaker Sir, the focus of this Budget has been on supporting
productive
sectors, stabilise inflation and restore provision of basic
public
services.
528. Realising this will require a paradigm shift in terms of
acknowledging
the reality that we cannot spend what we do not
have.
529. Sacrifices and deferment of some of the expenditures we would
have
wanted to incur on a variety of programmes and projects during the
course of
the year 2009 will, therefore, be unavoidable. In this regard,
matching
expenditure to our projected revenue has been the cornerstone of my
expenditure proposals.
530. This Budget contains measures, which if
consistently implemented, will
be able to stabilise prices, improve capacity
utilisation and productivity.
531. The measures I have proposed would
also enhance the efficiency of our
public enterprises and local authorities,
improve the management of public
resources, thereby, creating scope for
generating the required resources to
finance this Budget and other
initiatives, which grow our economy.
532. Mr Speaker Sir, I am,
therefore, calling on all Honourable Members in
this August House, and the
whole Nation as well as our external cooperating
partners to rally behind
the proposed measures in order to build a firm
foundation for the emergence
of a new economy.
533. It is, therefore, incumbent upon us to
consistently implement agreed
policies, notwithstanding the inescapable pain
which we will encounter
during the course of the year, avoiding needless
policy reversals,
inconsistencies and contradictions that will only yield
further economic
contraction. We have to stay the course if we are to
achieve our economic
objectives.
534. Mr Speaker Sir, I now commend
the 2009 National Budget to the House and
I lay the Estimates of Expenditure
on the Table.
535. I Thank You.
Hon. Senator P.A.
Chinamasa
ACTING MINISTER OF FINANCE
29 January
2009
Annexure 1
GOVERNMENT HOSPITAL FOREIGN EXCHANGE FEE
TARIFFS
DESCRIPTION OF PARIRENYATWA CENTRAL PROVINCIAL
DISTRICT
SERVICES HOSPITALS HOSPITALS GENERAL
HOSPITALS
HOSPITALS
General Ward US$ US$ US$ US$
Adult
12.00 10.00 6.00 4.00
Child 8.00 6.00 4.00 2.00
Private
Ward
Private ward per day Adult 24.00 16.00 12.00 8.00
Private
ward per day Child 12.00 8.00 6.00 4.00
Maternity Ward
Ante-natal,
General Ward per day 15.00 10.00 6.00 3.00
Post-natal, General Ward per
day 15.00 10.00 6.00 3.00
Maternity (all inclusive) care 6.00 5.00 4.00
3.00
Intensive/Coronary Care
Unit per day
Adult 15.00 10.00
8.00 N/A
Child (above 5 years) 8.00 5.00 4.00 N/A
Psychiatric
Unit
General Ward per day 5.00 4.00 2.00 N/A
Committed patient per
day free free N/A
Consultation Fees
Adult 10.00 8.00 6.00
4.00
Child (above 5 years) 5.00 4.00 3.00 2.00
Consultation -
Chronic
Adult 10.00 8.00 6.00 4.00
Child (above 5 years) 5.00 4.00
3.00 2.00
Prescribed Medicines At Cost At Cost At Cost At
Cost
Sundry items At Cost At Cost At Cost At Cost
Ambulance
charges per km 2.00 2.00 2.00 2.00
Document Searching Fee 1.00 1.00 1.00
1.00
DESCRIPTION OF PARIRENYATWA CENTRAL PROVINCIAL
DISTRICT
SERVICES HOSPITALS HOSPITALS GENERAL
HOSPITALS
HOSPITALS
Annexure 2
Fees for Tertiary
Education
Polytechnics
National Certificate (N.C) =US$200 per
term
National Diploma (N.D) =US$500 per term
Higher National
Diploma =US$600 per term
Bachelor of Technology =US$1 400 per
semester
Teachers Colleges
Diploma in Education =US$500 per
term
State Universities
Arts Humanities and Social Sciences =US$1
200 per semester
Science and Engineering =US$1 400 per
semester
Medicine and Veterinary Science =US$1 800 per
semester
Annex 3:
SUMMARY OF IRRIGATION PROJECTS DRAWING WATER
FROM
UNDERUTILISED EXISTING WATER BODIES
Irrigation Potential No.
of Source of water Allocated Amount
scheme Hectarage Beneficiaries
(US$)
Zhove 1,170 1,000 Zhove dam 640,000
Osborne 300 Osborne dam
633,500
Biri 1,000 100 Biri dam 416,700
Ngezi B 316 350 Mamina dam
97,000
Lilstock 500 Lilstock dam 466,700
Mazvikadei 6,000
Mazvikadei dam 970,000
Magunje 50 64 Magunje dam 33,600
Mundi
mataga 505 488 Mundi mataga dam 438,000
Mbindamombe 300 300 Mbindamombe
dam 115,400
Manyuchi 228 400 Manyuchi dam 230,350
Matezva 140 280
Matezva dam 106,350
Muzhwi 150 Muzhwi dam 100,140
Mupudzi 700
Mupudzi dam 1,293,000
Mtshabezi 300 600 Mtshabezi dam
240,000
Wenimbi 300 300 Wenimbi dam 150,000
Nhema 150 150 Siya dam
562,000
Bengura 250 250 Siya dam 647,000
Kanhukamwe 324 Kanhukamwe
dam 900,000
Mtange 100 200 Mtange dam 168,000
TOTAL 12,883 4,682
8,207,740 - ZimOnline