Source: Fiscal crisis, the role of Parliament – NewsDay Zimbabwe October 9, 2018
The past two weeks witnessed key policy pronouncements by President Emmerson Mnangagwa’s administration that Members of Parliament must unpack and debate extensively in order to give impetus to the quest to revive the ailing economy.
Parliament, mandated by the Constitution to oversee use of public resources, has a central role to play in the resolution of the crisis.
The first key policy pronouncement was the State of the Nation Address by the President, delivered on September 18, 2018.
It was then followed by the Monetary Policy Statement on October 1, supported on the same day by Finance minister Mthuli Ncube’s statement entitled Fiscal Measures for Reversing Fiscal Dis-equilibrium.
Both the monetary and fiscal policy statements acknowledged the root cause of the current economic crisis as the rapidly rising and unsustainable fiscal deficit which has been financed through heavy domestic borrowing, thereby crowding out the private sector and worsening the country’s public debt position.
Domestic debt has soared to $9,5 billion up from $275,8 million, while external debt now stands at a staggering $7,4 billion.
The government’s overdraft with the Reserve Bank of Zimbabwe now stands at $2,3 billion as at end of August 2018, well above the statutory limit of $762,8 million.
Treasury Bill issuances have increased from $2,1 billion in 2016 to a cumulative $7,6 billion by end of August 2018. This is equivalent to 36,5 % of GDP up from 4,4 % in 2014.
Ncube and the Reserve Bank of Zimbabwe governor John Mangundya are absolutely on point that such a grim fiscal situation requires the implementation of urgent and painful measures to achieve macro-economic stabilisation.
The time for populist policies that must be financed from the fiscus without corresponding inflows from productive activities, should be a thing of the past if the unsustainable fiscal deficit is going to be reduced and fiscal consolidation realised.
Borrowings by central government in excess of statutory limits should seriously concern the MPs.
This is because Section 300 of the Constitution prohibits borrowings that are in excess of statutory limits.
The limits cannot be exceeded without the authority of the National Assembly.
Going forward, members of the National Assembly must scrutinise all borrowings and ensure strict adherence to the Constitution and the Public Debt Management Act in the interest of macro-economic stabilisation.
The Public Debt Management Act itself needs review and amendment.
In its current form, it gives wide discretionary powers to the Minister of Finance to borrow.
It is regrettable that in the last Parliament the then Finance minister Patrick Chinamasa threw away recommendations from the Portfolio Committee on Budget, Finance and Economic Development that would have ensured a robust legal framework on public debt fully aligned to the Constitution.
One of the recommendations was to do with requiring quasi-government institutions to publish their borrowings in the Press in order to promote transparency and account better to the public.
The minister’s response was that advertising was an expensive exercise.
This was a lame excuse given some of the financial profligacy that we see daily in these public institutions.
While Clause 23 of the Public Debt Management Act clearly spells out the procedure which must be followed before a local authority or public entity can incur a debt, this whole process of loan contraction by the institutions is never made public to Parliament in violation of section 300 of the Constitution.
So the Budget, Finance and Economic Development Portfolio Committee will have a central role to play in fiscal oversight in order to fulfil section 299 of the Constitution which requires Parliament to monitor and oversee expenditure by the State and all commissions and institutions and agencies of government at every level in order ensure that all revenue is accounted for; all expenditure has been properly incurred; and any limits and conditions on appropriations have been observed.
The committee can still revisit the work undertaken by its predecessor in the last Parliament and ensure the country has a sound Public Debt Management Act that is enforced.
The Budget, Finance and Economic Development Portfolio Committee in the last Parliament tabled a very good report with recommendations that included subjecting all borrowings for parliamentary approval, requiring all government and quasi-government institutions to publish their liabilities in the local newspapers for purposes of promoting transparency and accountability and ensuring that the Executive reports to Parliament on debt contraction as stipulated in the Constitution.
The new committee must simply build on this good work undertaken by its predecessor.
Another area of interest to the MPs is the upward revision of economic growth projections to 6,3 % against the original Budget projection of 4,5 % and 4,8 % estimated for 2017.
Because this growth is largely driven by mining and agriculture, the minister has every reason not to celebrate because these sectors are prone to external shocks such as drought and a fall in commodity prices on the international market.
Members of Parliament must therefore enact legislation and push for policies that promote investment and value addition in the manufacturing sector.
The tourism sector can also contribute tremendously to economic turnaround provided tourists find Zimbabwe a low cost tourist destination.
Citizens expect robust debate of the policy statements devoid of political posturing.
It will be a betrayal of the trust entrusted in elected office bearers if what we are going to hear in Parliament is lots of noise without any substance.
Strong oversight is what we expect from the lawmakers in order for the various measures to achieve the desired fiscal consolidation.