THE economic challenges being experienced in the country are surmountable, but call for urgent reforms, Finance and Economic Development Minister Professor Mthuli Ncube has said. Prof Ncube said this while announcing a raft of fiscal measures to be taken as the country seeks to reverse fiscal dis-equilibrium.
Chief among the challenges faced by the economy is a high budget deficit mainly financed through domestic borrowing with the use of instruments such as Treasury bills, overdraft and cash advances from the central bank, arrears and loans from the private sector.
Said Prof Ncube: “These challenges are however not insurmountable. These challenges call for urgent reforms. It cannot be business as usual.
“Bold decisions need to be taken on the reforms front in order to stimulate growth and sustainable development. At the centre of the above challenges is the unsustainable high budget deficit.
“This challenge has had destabilising implications not only to the financial sector but to the rest of the economy.”
The high budget deficit has crowded out the private sector, hence constraining production while also increasing money supply in the economy.
This has translated into exchange rate misalignment and inflationary pressures now at 4,9 percent as at August 2018.
Similarly, the high deficit has ignited expansion of domestic debt from $275,8 million in 2012 to current levels of $9,5 billion.
External debt is $7,4 billion, putting total public debt at $16,9 billion.