Source: MDC plan ‘will create $100bn economy’ – DailyNews Live
30 April 2017
HARARE – Our staff writer Blessings Mashaya speaks to the opposition MDC
shadow Finance minister Tapiwa Mashakada. Below are excerpts of the
interview.
Q: Do you think Finance minister Patrick Chinamasa has done enough to
solve the country’s economic problems and the current cash shortages?
A: Since 2013 the economy has plunged into a prolonged deflation because
of low confidence levels. The situation has been made worse by a litany of
policy inconsistencies and the absence of a clear policy trajectory.
ZimAsset is dead in the water. The two million jobs that were promised
were not created.
The seven percent growth rate that was targeted by ZimAsset was not
achieved.
The $7 billion that was supposed to be mobilised under ZimAsset did not
materialise. The country is now mired in fiscal crisis characterised by a
cumulative budget deficit of $1,6 billion as at December 2016.
The economy is not growing hence public revenues have dwindled to $3,5
billion per year compared to public expenditure of $4,8 billion.
The cash squeeze has forced government to issue Treasury Bills in excess
of $2 billion a move that has partially affected market conditions and
exacerbated the liquidity crisis. Eighty-three percent of the total budget
is chewed up by employment costs.
This has negatively impacted infrastructure development and social
services delivery.
People are dying like flies in our public hospitals due to lack of drugs
and equipment. So, really, Chinamasa inherited a structural strait jacket.
The summit of his failure is of course the incapacity of government to
meet its obligations, like salaries and wages for instance.
But it is naive to blame Chinamasa as an individual. It is the whole Zanu
PF government that has failed. Chinamasa as the head of treasury is the
natural target of public criticism but he does not run that ministry.
His recommendations on fiscal prudence have been overridden.
But to the extent that he has not seen it fit to resign, I would say that
his culpability is very high. One of the grave mistakes he made was to
commit Zimbabwe to repay $1,8bn arrears when he knew very well that the
economy did not have the capacity to service the debt.
My own assessment is that under his watch, Zimbabwe’s macroeconomic and
fiscal conditions deteriorated so fast.
Q: Government has been told countless times to streamline its expenditure,
however, deputy Labour minister Tapiwa Matangaidze recently promised an
increment to teachers, do you think this is practical or he is
politicking?
A: The question of streamlining government expenditure is almost like a
taboo in Zanu PF. Political expediency overrides economic rationale. So
the deputy minister of Labour is exposing his infantile mentality.
It is wishful thinking to promise an increase in teachers’ salaries when
government cannot pay civil servants salaries and bonuses. It does not
require a rocket scientist to see that the government was shut down long
back. The economy is on auto pilot.
Q: There have been calls to adopt the rand as the primary currency, with
Mugabe even supporting the idea. Do you think the rand can save Zimbabwe
from the current cash woes?
A: Joining the South African Rand Union would ameliorate Zimbabwe’s cash
crisis but who would want to be exposed to the Zimbabwean contagion?
Zimbabwe’s largest trading partner is South Africa and it would make a
good business case to adopt the rand but the mechanisms are not that easy.
For starters one of the preconditions is that Zimbabwe must have its own
domestic currency. And at this juncture conditions are not yet ripe for
the reintroduction of our own currency.
The country has to ratchet up its production and exports in order to close
the trade balance. The country has to rebuild its own foreign currency
reserves in order to back up our own currency.
Until all these fundamentals are achieved, it’s not possible either to
adopt the rand or reintroduce our domestic currency.
Q: Manufacturing firms have been having problems making international
payments, with market figures showing a billion transactions waiting in
queues. What can be done to solve this problem?
A: Companies have been put in a Catch-22 situation due to the introduction
of bond notes as they cannot use bond notes to make foreign payments.
Because of the shortage of foreign currency, companies have to join the
RBZ forex rationing window.
Under the circumstances, the Nostro account is struggling and half the
time it is near empty. The problem will persist until a permanent solution
to the cash shortages and liquidity crisis is found.
Q: Since IMF and World Bank Spring meetings ended, what do you expect from
RBZ governor John Mangudya and Chinamasa?
A: The IMF/ World Bank springs meetings have come and gone and for me they
have not been eventful. As long as Zimbabwe does not get debt relief and
fresh loans, the situation will even get worse.
The good news is that the IMF has revised upwards the growth forecast to
two percent although it is still too low to make any impact.
Q: Some companies in Zimbabwe have been importing power for their own use.
What’s your comment on the electrcity situation?
A: There is nothing wrong in companies importing their own power. But
government must give those companies fiscal incentives in order to bridge
their balance sheets.
Q: If MDC is elected into power in 2018, what are you going to do to solve
the economic and social problems?
A: The MDC has a credible transformation agenda for Zimbabwe. Our economic
vision is the creation of a $100 billion economy within the first 100 days
on the back of investment renewal and confidence that will result in the
review of the indigenisation policy.
An MDC government will right size the government, act on corruption and
tap on Diaspora resources in order to strengthen the budget. Obviously
ghost workers will go the morning after the swearing-in of …Tsvangirai
at State House.
Production will be our buzzword and obviously, using our international
goodwill, the MDC will go out to float infrastructure Eurobonds bonds in
deep capital markets.
We will get syndicated off-shore loans on the strength of our economic
stimulus measures.
An MDC government will make primary and secondary education absolutely
free and introduce loans and grants at tertiary education level. We will
bring back the land market by giving bankable title to all productive
farmers.
We will compensate commercial farmers in terms of the Constitution and
restore the country’s bread basket status. The conditions of service of
our defence forces will be improved and their equipment upgraded.
An authentic civil service audit will be done and once the correct levels
of establishment are rationalised, we will pay competitive salaries to our
civil service.
We will revamp our roads, railways and energy plants. Parastatals will
either be commercialised or recapitalised through private equity or
venture capital.
Rural areas will be transformed through our industrialisation and
modernisation programme. But most importantly we will implement
devolution.
All revenues will go to the Consolidated Revenue Fund and fundraising
roadblocks will be suspended forthwith.
Our industrialisation programme will start with the resuscitation of
closed companies like the Ziscosteel.
We will create jobs from our infrastructure and industrialisation plan.
All this is possible if we can change governance culture.
COMMENTS