Hopeless budget

via Hopeless budget – DailyNews Live by Chegetai Zvauya, Kudzai Chawafambira and John Kachembere  20 DECEMBER 2013 

Finance minister Patrick Chinamasa yesterday presented a $4,1 billion 2014 national budget that experts said failed to inspire confidence and which he admitted was policy-based and grossly short on funding.

Chinamasa hinted that government would have to come up with a supplementary budget soon if funds are remitted from a diamond auction held this week in Antwerp in Belgium.

He said out of the $4 billion budget, $3,5 billion would go towards recurrent expenditure — crowding out pressing needs — particularly to do with economic revival.

John Robertson, an independent economist, said the 2014 budget does not spur growth in the economy following government’s insistence on the controversial indigenisation policy.

“There is no way we are going to achieve the 6,1 percent growth rate when we are stifling growth in the mining sector by insisting on the 51 percent local ownership on mines,” Robertson said.

“Which investor would be willing to put 100 percent of their money, take 100 percent of the risks and only retain 49 percent of the profits?”

Christopher Mugaga, another economist, said it was an “ambitious budget.”

“He concentrated on trying to remind the MDC that they (Zanu PF) can do it alone instead of proposing substantive policy prescription,” Mugaga said. “How could he fail to come up with policies to attract Foreign Direct Investment (FDI) in mining and financial service sector which are apparently anaemic of liquidity. The assumption of a $1,3 billion debt is not a solution or way of capitalising the central bank, it is just reversing the approach to technical insolvency by the apex bank.”

Robertson noted that Chinamasa did not do what was necessary, which is encouraging FDI.

“The country will not meet the set targets on mining, agriculture, manufacturing because there is no funding,” he said.

Tendai  Biti, the former Finance minister, dismissed the  2014 budget.

“How does minister Chinamasa celebrate this hopeless budget considering that he has given $100 million towards the informal sector without supporting the formal industry? This is the most irresponsible budget he has presented. It is just a clueless and hopeless budget,” Biti said.

He said the budget was “anti poor and anti-people.”

Eddie Cross, Bulawayo South MP, said: “Chinamasa had a difficult task today. He had to balance heavy demands on expenditure side against limited revenues. I think the forecast budget for this year is quiet ambitious.”

“The measures he has taken to stabilise the banking industry are extremely important, particularly on the Reserve Bank. However, some of the proposals such as the reaffirmation of the indigenisation policy and imposing mineral taxes are major impediments in attracting investment,” the economist added.

Simbaneuta Mudarikwa, minister of State for Mashonaland East, described the spending plan as a “people-oriented and realistic budget.”

“It has got the elements of Zim Asset which were endorsed at the heroic (Zanu PF) conference in Chinhoyi, so it is a realistic budget,” he said.

“So the element of having money directed to artisinal miners who are our people in the rural areas which means everybody is now masters of their own destiny, financed by government.”

Biti said that there was no clear explanation on where the budget was going to be funded from given  that there was already a $130 million deficit on the 2013 budget as of October 30.

“In that respect, it is a smokes and mirrors budget,” Biti said.

“It is going to be unfunded. The aspect of it being so viciously anti-poor trying to tax musicians and imposing capital gains tax on high density suburbs, I think it is a disaster. It’s a clueless budget and it celebrates mediocrity,” he said.

“The underlying assumption being made of a projected GDP growth rate of 6,1 percent for next year are unrealistic. The question many would ask wouldbe, ‘what is going to change next year which is not in 2013 if we are going to have a growth rate of 3, 4 percent?’

“So clearly, the projections are false and fictitious. The country is starved of capital that is why we have got a modest budget. Under the circumstances, the budget should have encouraged private capital to flow into Zimbabwe, but regrettably the head lying of this budget is the vicious statements made on reconfirming the agenda of indigenisation,” said Biti, adding that “it is the wrong policy at the wrong time.”

Supa Mandiwanzira, deputy minister of Media, Information and Broadcasting Services and Nyanga South Zanu PF MP, said the budget inspired confidence as it did not rely heavily on foreign funding.

“It is strengthening the resolve of our people and our country,” Mandiwanzira said.

“We must utilise our resources for our own economic good. We have to do things on our own.”

He said the budget was realistic in that it was encouraging Zimbabweans to use their own resources.

“Under the circumstances where we are still under sanctions from the United States and the European Union, it is a very realistic budget,” he said.

Joseph Chinotimba, Buhera South Zanu PF MP, said Chinamasa was one of the best Finance ministers since independence.

“Everything he presented was the best,” he said. “Zvasiyana nezvaBiti (It’s a welcome departure from Biti’s budget presentation.) He spoke what resonates with the people of Zimbabwe. If implemented, it will make everything right.”

Nelson Chamisa, MDC MP for Kuwadzana described the budget as a “vampire budget” sucking blood out of the poor.

“Chinamasa is proposing taxing the poor people heavily who could have sold their properties and also entertainment  and artists,” he said.

“They have no idea on how to run this economy and this is why we are having such a bad budget, which is not what the country requires at this moment.”