Maravi

(TALKZIMBABWE) Biti reduces budget by 50%

Biti reduces budget by 50%
Staff Reporter
Thu, 19 Mar 2009 04:25:00 +0000

FINANCE Minister Tendai Biti yesterday cut the 2009 budget expenditure proposals to US$1 billion from US$1,9 billion, announced new measures and revised some, as he took into account economic developments in the last few months.

Government will be operating on a strict "what we gather is what we eat" basis while all sources of revenue will now be directed to the treasury.

Presenting his budget review statement to Parliament yesterday, Biti said indications were that only US$1 billion, instead of the initially projected US$1,7 billion would be collected as revenue hence the need to reduce expenditure proposals in line with the thrust for a balanced budget.

Government collected US$50 million in February and March, a figure much lower than the initially projected US$140 million per month. This will only be enough to cater for civil servants’ allowances.

The 2009 budget statement presented by then Acting Finance Minister Patrick Chinamasa had also been revised to allign with the Short Term Emergency Recovery Programme, to be launched today.

Under STERP, payments of civil servants’ salaries was recognised as the most important pressing issue and would thus be the first to be provided for. About US$299,4 million has been set aside for civil servants.

There had been no international budgetary support so far.

In a tacit reference to economic sanctions, Biti said, "The reality of the matter is that at this stage, no country is prepared to support us directly other than the traditional humanitarian aid being channelled through the United Nations Development Programme."

However, South Africa and the Sadc region at large, have said they are working on a rescue package for Zimbabwe.

Pay As You Earn, which traditionally contributed 40 percent of revenue, had been the least performing in the last three months largely due to high unemployment levels and the informalisation of the economy.

Biti hinted that Government would soon dispose of some of its "family silverware", particularly in the communication sector while other fundraising activities such as the floatation of international bonds will be pursued.

Public Private Partnerships in the areas of health and infrastructural development, hosting an investors’ conference will need to be pursued.

He announced new tax and duty measures to beef up revenue generation while further empowering the ordinary person.

The minister also announced that tax-free thresholds under Pay As You Earn, which had been set at US$125 in the original budget, will be increased to US$150 by April.

On civil servants’ remuneration, the minister said current foreign currency inflows are not sufficient to review upwards the allowances of US$100 that are being given across the board.

To this end, he said he has set aside $299,4 million for civil servants and will maintain the allowances at the US$100 proposed by Senator Chinamasa while efforts are being made to provide proper salaries.

He said the provision of proper salaries to civil servants is a priority since this will enable Government to collect PAYE and increase revenue as opposed to the current system where allowances are not taxed.

The minister also announced that businesses that evade paying presumptive tax would have their properties attached to recover the outstanding amounts that they owe.

Presumptive tax was introduced to collect tax from informal traders and unlicenced businesses that normally evade paying tax.

The minister also scrapped the special tax that was proposed on unproductive income that is deposited into individual and corporate accounts, since it is also paid in foreign currency.

In the health sector, Government has adopted a new targeted approach where available funding in a given period will be concentrated on essential requirements for one institution, starting with Harare Central Hospital.

US$27,7 million has been set aside to support vulnerable groups under existing social protection programmes.

Biti lamented the "huge and limitless" demands on treasury such as furniture for new offices, fuel and airfares which had reduced his ministry to fire-fighting issues instead of concentrating on core fiscal priorities. - Herald/TZG

Labels: BUDGET, NEOLIBERALISM, TENDAI BITI

posted by MrK @ 8:08 PM