MPs must engage in robust debate on economy

via MPs must engage in robust debate on economy – NewsDay Zimbabwe August 7, 2015

The Mid-Term Fiscal Policy Statement presented to Parliament by Finance and Economic Development minister Patrick Chinamasa last Thursday has clearly shown that the Zimbabwean economy is in the intensive care unit. Recovery will require extraordinary measures and less of politicking.

Members of Parliament should take the fiscal policy statement seriously and engage in a more informed and robust debate if solutions are to be found to arrest the slide. It is disheartening to note that some of the MPs seem not to be taking the statement with the seriousness that it deserves.

When the projected gross domestic product growth rate in 2015 is revised by more than 100% to 1,5%, this is not something to be taken lightly, and should be sending serious alarm bells. In other countries, such a massive revision in economic growth prospects would have shaken the markets to their foundations.

The huge slump in national income explains why the minister now projects total revenue inflows to reach $3,6 billion, down from an earlier projection of $4 billion. I still think the revised revenue projections are on the optimistic side given the huge slump in the economy.

It would seem Chinamasa has abandoned the policy of cash budgeting or a balanced budget where “we only eat what we kill” — to use former Finance minister Tendai Biti’s famous phrase. A budget deficit of $400 million is now anticipated following the drastic reduction in projected revenue inflows.

The minister must provide a clear explanation on why he is now budgeting for a deficit when measures to finance that deficit have not been clarified. It would have made economic sense for the minister to reduce expenditure in order to match the revenue inflows. The minister talks about financing the deficit through a combination of domestic and external sources. But with public and publicly guaranteed debt reaching $8,4 billion as of June this year, we cannot afford to finance the deficit through borrowings as this will worsen the already precarious debt position.

The MPs must also seek better clarification on how the Minister of Finance is going to reduce the civil service wage bill currently chewing an astronomical 84% of the National Budget. The mid-term fiscal statement is only pregnant with intentions, but devoid of specific measures that the lawmakers can then monitor. This clarification is even more important now that the Minister of Public Service has ruled out retrenching civil servants.

Honestly, there is no way this unsustainable wage bill can be reduced from 75% to 40% of the Budget without retrenching public servants. Admittedly, it is politically unpopular to retrench, but there is no way out for the cash-strapped government. This is a bitter pill that has to be swallowed in the interests of the economy.

The MPs should also insist that the government addresses wasteful expenditure rampant in ministries and public enterprises as the Auditor-General’s successive annual reports have clearly shown. The Minister of Finance makes reference to amending the Public Finance Management Act to address these accountability issues. This is positive. But with any public policy, enforcement is necessary for the policies to make an impact.

One area that the MPs must debate extensively is the huge perks showered on senior public servants. Why these public servants have to be awarded at least two top-of-the-range vehicles in an economy on its knees puzzles me. And all this travelling by government officials to endless meetings abroad is another sheer waste of scarce public resources. Worse still, senior government officials all travel business class, again another unnecessary profligacy. Why live large when you cannot afford it?
Tightening of belts must begin at the top. These are the practical issues that we expect our lawmakers to be debating. This is the time to abandon partisan debate and focus on practical solutions to our economic problems.

Measures such as banning the importation of second-hand clothing will not substantially address viability issues in industry.
We are firefighting, nothing more. Policing such measures will require deployment of huge financial and human resources, putting a further strain on the fiscus.

We should be addressing the underlying or root causes to poor economic performance. The root causes are massive de-industrialisation due to tight liquidity, unpredictable and inconsistent policies that have scared away foreign investment, plunder of natural resources with most of the proceeds externalised, corruption in both public and private sectors and negative perception about the country’s political future.

These are the issues that have to be addressed in order to revive sentiment. Economic agents can only make investment decisions in our favour if they are confident that policymakers will not make policy u-turns for political expediency. Above all, they want to be assured that their investments shall be safe. Businesspeople invest primarily to make money. It is not for a social cause. Capital will therefore flow in the direction that gives maximum returns. That is the reality of the world we live in.
The sooner we accept that reality, the better for the country’s economic fortunes.

It is therefore high time the MPs stopped scratching the surface and debate the fundamental issues. The electorate that the MPs represent expects more robust and constructive debate that generates solutions to our economic mess. MPs must research more and widely consult various stakeholders in order to go to Parliament armed with adequate data and information for use during debate.

l John Makamure is the Executive Director of the Southern African Parliamentary Support Trust. Feedback: