Maravi

(TALKZIMBABWE) Biti learns from Chinamasa and Gono

Biti learns from Chinamasa and Gono
Comment
Fri, 04 Dec 2009 01:32:00 +0000

FINANCE Minister Tendai Biti's Budget Statement was welcomed by the business community in Zimbabwe. In the statement, the minister was broadly optimistic about Zimbabwe’s prospects predicting that that the country's Gross Domestic Product will grow by 7 per cent after ten years of contraction.

Broadly, Minister Biti predicts a healthy economic future for the country. Mr. Biti said growth would come from key sectors such as agriculture and mining; sectors he said badly needed humanitarian injection just a few months ago when he suggested that the country declare itself a Highly Indebted Poor Country (HIPC).

Minister Biti's U-turn is interesting and one wonders why he was thinking of going the HIPC way.

His report that Government revenues were improving from about U$4 million in March to U$90 million in June is testimony that his originally idea on HIPC status was flawed.

The minister said his Budget was the most comprehensive, as over 5,000 people and businesses used the Ministry of Finance website to make their submissions.

It would be interesting to know how many of those 5,000 entities suggested the HIPC way?

Does the MDC-T have a blueprint for Zimbabwe's economy and can we trust that blueprint?

Surely it makes less sense now to think that Zimbabwe could have been considered under the HIPC initiative when it can register such significant growth, even under the current sanctions regime.

Reserve Bank Governor Dr Gideon Gono suggested that these productive sectors, agriculture and mining, need cash injection. His economic logic is now clear.

Minister Biti's Reconstruction, Stabilisation, Recovery and Transformation (RESTART) policy, proposed to make the Reserve Bank "autonomous in the maintenance of price and exchange rate stability, and the effective monitoring and supervision of the financial sector". Yet, as Finance Minister he is proposing to curtail that autonomy.

He also proposed that Zimbabwe "needed budgetary and balance-of-payments support ... during the stabilization period" - and that income tax will be reduced for those in the low income bracket.

His party, the MDC-T, is not working to get that "needed budgetary and balance-of-payments support" through the removal of illegal sanctions againts the country.

Minister Biti's Budget infact is good for businesses, but still fails to deliver for the poor. While businesses will welcome the reduction in corporate tax from 30 percent to 25 percent, the reduction in personal tax failed to meet expectations.

The Minister could have further reduced personal tax in order to increase disposable income and thus spur local demand.

Minister Biti's Budget is not exactly different from the one presented by then Acting Minister of Finance Patrick Chinamasa just over a year ago. One then wonders what exactly the MDC-T is proposing for the people of Zimbabwe.

Labels: GIDEON GONO, HIPC, PATRICK CHINAMASA

posted by MrK @ 4:55 AM