Source: EDITORIAL COMMENT : Budget surplus a sign of fiscal discipline | The Herald April 15, 2019
The Treasury Quarterly Bulletin (2018 Fourth Quarter) released last week showed that Government has arrested budget deficits and is on the right track to achieve its economic growth targets.
The report indicates that the country recorded a budget surplus by December 2018, against a background of improving revenue collections.
Revenues rose by 43,4 percent to US$1,69 billion, surpassing the set target of US$1,18 billion on the back of the implementation of austerity measures.
We all recall that when Professor Mthuli Ncube was appointed Minister of Finance and Economic Development for the Second Republic, the first thing he talked about was to arrest budget deficits.
With support from President Mnangagwa, the Transitional Stabilisation Programme, which runs from October 2018 to December 2020, was drafted and confirmed the position that fighting budget deficits is a priority.
It then makes good news to hear that within a few months, Government has made strides in dealing with the budget deficit and the country is now on the right track to eradicate it altogether.
The importance of dealing with the budget deficit cannot be overemphasised, for it anchors the economic growth of any country.
When a country has a budget deficit, it means spending exceeds its income. If the deficit is not addressed, it then creates debt, whose interest makes the debt grow each year.
When a country has a high debt, it finds it difficult to raise funds to finance its developmental agenda because creditors consider it too risky because they doubt its ability to pay back.
A budget deficit ends up creating a burden of indebtedness as it pushes interest rates and lowers investors’ interest.
This is why there is every reason to celebrate when it is announced that Government has managed to arrest this monster, which has been a major hindrance to the country’s economic development for some time.
It shows that it is not a fluke when President Mnangagwa says that the Government is on the right trajectory in its efforts to turn around the economy and achieve Vision 2030 of an upper middle income status.
The successful fight against budget deficit is a sure sign that Government’s strategy has been to address the salient fundamentals that ordinary citizens do not always cite as an impediment to economic growth.
Yet such fundamentals, if left uncorrected, have a major bearing on the state of the easily noticeable problems affecting the economy. What is now needed is for people to be calm and patient as the Government sets the right foundation for the turning around of the economy.
Very soon, the problems that people cite as affecting the economy will be corrected in line with the right fundamentals that would have been set.
People should stop relying on pseudo economists and alarmists who want to give an impression that everything has gone haywire, when in actual fact the fundamentals necessary to growth take-off are being addressed.
There should be a balance between the situation we face today and where we are coming from.
The New Dispensation inherited an economy that had been riddled with skewed fundamentals that were responsible for a turndown in almost every facet of the economy.
It cannot obviously take a few days to correct such a situation, as the task at hand is mammoth.
But addressing such a crucial economic fundamental like the budget deficit within such a short time shows that Government has the right vision for the country. Very soon, everything will start falling into place as one fundamental after another is tackled.
In our view and analysis, yes, the targets set by Government are ambitious considering where we are coming from, but they are attainable as we are beginning to witness.
With the bold, concrete and comprehensive plans being undertaken to reform the economy, we do not envisage anything that can hinder us from achieving the economic targets.
Such tough measures are expected to bring some pain, but the pain will not last forever as all fundamentals will soon start falling into place.
The most pressing task at the moment is for people to free their minds from the thinking that Zimbabwe cannot rise from the ashes to become an economic giant in Africa and the world.
There is need to break away from the old way of looking at things and start having a positive frame of mind towards achieving the set goals.
And it is important that Government is leading the way.