Source: EDITORIAL COMMENT: Government profligacy is the problem | The Financial Gazette February 23, 2017
LAST week, the governor of the Reserve Bank of Zimbabwe (RBZ), John Mangudya, raised a pertinent concern over the allocation of foreign currency by banks: A substantial sum amounting to US$206,7 million was used for the offshore payment for card and DStv transactions.
The card payments relate to Visa and MasterCard usage by Zimbabweans. The card and DStv payments were made through the local banks’ nostro accounts between July and December 2016.
The governors’ concern was that these payments should have been settled locally and thus preserving foreign exchange for raw materials and other foreign payments that include education. In fact, card transactions, which require pre-funding of nostro accounts, were the second largest user, after fuel, of foreign exchange during the second half of the year.
“Use of hard earned foreign currency in this manner is not sustainable for the economy. Spending more foreign exchange on DStv subscriptions than on raw materials to produce cooking oil, for example, is not only counter-productive, but also illogical,” Mangudya said.
The governors’ concerns are legitimate. But allow us to ask a question: What is the magnitude of expenditure by government on foreign travel by Cabinet ministers, their deputies and other senior civil servants? Shouldn’t the governor be equally concerned by this kind of expenditure that is clearly depriving the country of much-needed foreign currency that should go towards the importation of raw materials?
In case the governor has forgotten, the Ministry of Finance has previously indicated that government officials are spending huge sums of money abroad in the form of travel allowances. In fact, at one point, former finance minister Tendai Biti contemplated a name-and-shame disclosure of high-spending, globetrotting government ministers and their officials, who were milking Treasury of millions of dollars.
Mangudya should first deal with government spending that has denied Treasury space for capital projects that would create jobs and spur economic growth. He should be worried by government spending that has crowded out the private sector and made borrowings expensive and beyond what the productive sectors of the economy, which should generate foreign currency through exports, could afford. We are afraid that DStv subscriptions may not have been a concern if these were the preserve of the elite and well-connected. They are a problem because they have become an alternative to a public that finds national television programming to be boring and uninspiring.
In fact, it is not far-fetched to aver that government bureaucrats and their ministers constitute the biggest customer base for DStv.
Moreover, it is these same people whose children learn at expensive, foreign universities at a cost to the taxpayer who Mangudya thinks should not have a right to the niceties enjoyed by the political elites.
Mangudya should address the real problems that have brought us to our current circumstances. It is not how the public chose to spend their hard-earned money; it is a government living beyond its means and bankrupting the country through an unsustainable expenditure pattern.
Deal with that first.