(HERALD) High expectations for Budget

High expectations for Budget
By Walter Muchinguri

FINANCE Minister Tendai Biti will today present his maiden National Budget for 2010, amid high expectations to introduce measures aimed at improving foreign currency inflows and improving the standard of living.

A lot is expected of the Minister of Finance in the various sectors of the economy but on the business side expectation is high that the minister will continue with current reforms to the operating environment.

Confederation of Zimbabwe Industry expects the minister to use the 2010 as an opportunity to solidify the progress towards recovery made so far.

It expects the minister to announce the creation of an Independent Budget Office to oversee the Budget from a non-partisan perspective that would send a strong signal to all stakeholders that Zimbabwe is serious about economic recovery.

In addition it believes that the country can benefit significantly from overhauling the tax structure but was immediate to point out that there is need for taking the necessary time to do the job properly.

"Experience has shown that rushed reforms fail. There are many quick wins to be had and we should focus on the quick wins while at the same time setting in place a Commission of Enquiry to drive the more comprehensive reform," said the CZI.

As part of its other expectations the CZI said that the rand should be formally adopted as reference currency with effect from 1 January 2010.

This, according to the manufacturer’s representative body would put the country on a level playing field with South Africa and sort out the perennial problem of change that has unnecessarily increased the cost of living.

The CZI also recommended that the IMF funding be utilised as soon as practicable and that it fully concurs that the funding be considered as part of the Consolidated Revenue Fund and its use be subject to Parliamentary oversight in line with applicable laws.

The fiscal environment according to the CZI will remain very constrained in 2010 and therefore the Finance Minister should ensure that all non-core non-essential expenditure should be eliminated.

In terms of the agriculture sector, the CZI believes that the fiscal policy should address the need for sub-letting agreements by beneficiaries of the land reform process and short-term leases to foreign investors to ensure optimum land use.

CZI’s immediate past president, Mr Callisto Jokonya said there is need for the reduction of both individual and corporate tax in order to stimulate economic activity as well as investment inflows.

In addition he said that there must be liaison between indigenisation and empowerment with focus being on sending the right signals to investors.

"Politicians must realise that Zimbabwe comes first ahead of their interest and as such they must enact policies that are in the best interest of Zimbabwe.

"The signing of the Bilateral Investment Promotion and Protection Agreement with South Africa was certainly a step in the right direction," he said.

He said there was also need to encourage value-addition especially in the mining sector where there is a lot of interest and investment coming in as well as the agricultural sector, which is the backbone of the economy.

Elsewhere analysts believe that a bi-yearly Medium-Term Fiscal Framework should be announced to guide the economy and stakeholders.

"The various intermediation measures that have been introduced since the beginning of the year have brought stability to the economy, medium-term planning now becomes feasible, said one analyst.

An economist said there should be a review of civil servants allowances to regional standards.

"We do appreciated Government’s constraints but civil servants play a pivotal role in implementing Government policies and as such they should get remuneration that makes them apply their minds and energy to the work at hand.

"In the same vein we also have a lot of people who are vulnerable as a result of the adoption of the multiple currency system.

"It is the duty of the minister to continue recognising this by putting in place appropriate safety nets to cater for this group," said the other analyst.

Other expectations were for the minister to ensure that all privatisation revenue be re-invested as capital expenditure to preserve value.

In addition it is expected that privatisation of most entities be done in stages with the first stage allowing Zimbabwean investors an opportunity to buy into entities being privatised.

This will accelerate indigenisation and empowerment. In the second stage of privatising each entity foreign investors can then be sought.