(TALKZIMBABWE) Biti's budget review is an exercise in futility

Biti's budget review is an exercise in futility
By: By Itayi Garande
Posted: Sunday, July 18, 2010 3:17 pm

FINANCE Minister Tendai Biti’s Mid-Term Fiscal Policy Review Statement bore all the hallmarks of MDC-T manipulation of Zimbabwe’s economy and has western businesses’ grubby finger prints all over it. It is a flawed construct, a contradictory review and a missed opportunity to start putting things right. Instead, Minister Biti used the budget once again to promote the MDC-T agenda for the next election.

The review statement, like all previous statements by this minister, was highly politicised and full of economic paradoxes that render it ineffectual as a statement for growth or a pro-poor policy as the minister claims.

The statement was dead on arrival as the two Short Term Economic Recovery Programmes (STERP and STERP II) on which it is based are full of economic contradictions and political undertones and overtones that make the minister not only a bidder for discredited western neo-liberal policy, but a true servant of the MDC-T party, at the expense of the majority of Zimbabwean people, especially the poor and vulnerable that he purports to be fighting for.

While claiming to recognise the need for growth in the economy, the statement was about the growth of the power and influence of the MDC-T in government and reducing Zanu-PF’s influence during the life of this inclusive Government and after.

Minister Biti’s review is based on some bizarre ideological base. He says that he wants to build a “strong economy based on market principles with careful state interventions” (Sect. 9 of the Review). His ‘National Vision’ is based on what he calls ‘Jeffersonian Principles’.

This ‘national vision’ is misaligned with the aspirations of the Zimbabwean people whose struggle was (and still is) premised on land and the redistribution of resources to end the skewed colonial economic structure. This is the ‘national vision’ for Zimbabwe. The position of Zanu-PF and other liberation organisations in Zimbabwe and in Africa on land is clear. It needs no further elaboration.

Ironically, Thomas Jefferson’s vision for America was an agricultural nation of farmers minding their own affairs without external influence, and his opposition to the banking system, or bank finance, was fierce. Through Minister Biti, we have seen the World Bank and IMF yet again taking centre stage in Zimbabwe. Jefferson is famously quoted as saying: "I sincerely believe ... that banking establishments are more dangerous than standing armies; and that the principle of spending money to be paid by posterity, under the name of funding, is but swindling futurity on a large scale.

"If ... people ever allow private banks to control the issue of their currency, first by inflation, then by deflation, the banks and corporations that will grow up around them will deprive the people of all property until their children wake up homeless on the continent their Fathers conquered ... The issuing power should be taken from the banks and restored to the people, to whom it properly belongs."

The ‘Jeffersonian principles’ that Mr Biti alludes to, are in direct contrast to the prescription he is proposing for Zimbabwe under various guises: HIPC, macro-economic stabilisation, etc.

A close look at Minister Biti’s review statement reveals some very disturbing economic contradictions.

An overriding contradiction is embedded in the oft repeated “What We Gather Is What We Eat” statement made during the presentation of a Revised 2009 Budget. By failing to address the concerns of the working population, communal farmers and the poor in Zimbabwe, Minister Biti does nothing to help those who would “gather whatever we eat”, but addresses the concerns of big businesses, Rio Tinto, Anglo-American, etc.

All the successes in the agricultural sector that Minister Biti reports are based on policies advanced by Dr Gideon Gono and the Acting Finance Minister Patrick Chinamasa. Minister Biti’s review proves beyond doubt that Dr Gono’s farm mechanisation programme – which he criticises harshly at any given opportunity – is beginning to bear fruit. The agricultural sector has consistently performed well since the implementation of the farm mechanisation programme, despite the illegal and ruinous sanctions imposed by the west.

Last week Minister Biti reported that agriculture grew 18.8 percent in 2010, compared to 14.9 percent in 2009. 86.5 million kilograms of grain were sold in 2010 compared to 55.6 million in 2009 and horticultural production was also up (43 000 tons in 2010 compared to 35 000 tons in 2009). Other figures in the agricultural sector point to a positive growth. Tobacco production in 2005 was 74 000 tonnes, in 2010 it was 93 000 tonnes. Maize and beef production have also been consistently going up since the introduction of the farm mechanisation programme.

These statistics are buried in Minister Biti’s latest review and are an indictment to MDC-T claims that the land reform programme will destroy Zimbabwe’s economy.

In contrast no growth was recorded in industry, despite the minister’s claims that the sector would register growth with the formation of the inclusive Government. Minister Biti is on record claiming that “Prime Minister Morgan Tsvangirai has friends around the world” who would help transform Zimbabwe’s industrial sector.

Because these statistics are painful for Minister Biti to report, he offers a somewhat interesting claim that the agricultural successes were achieved because of a ‘liberalised marketing environment’ (Sect. 56) that he introduced. Yet in Section 62 of the Review, Mr Biti then contradicts himself and admits that the successes of the agricultural sector were due to ‘improved support, timely availability of inputs’ – what Dr Gono instituted in the first place.

Without Dr Gono’s efforts the US$197.1 million support extended to farmers (A2 and A1 communal farmers) would not have been forthcoming and Zimbabwe would not have registered the impressive growth in the agricultural sector.

Claims by western countries that they are feeding Zimbabwe through aid and their manner of throwing figures around to confuse people should be dismissed. Donor countries, through the UN Food and Agricultural Organisation, only gave Zimbabwe US$74 million in 2009 (as per Minister Biti’s review statement), yet the government extended US$227.4 million to the agricultural sector.

It is, therefore, interesting that the finance minister, who was given ‘The Best Finance Minister in Africa’ accolade by the west, would propose to have Zimbabwe declared a Highly Indebted Poor Country (HIPC); despite its capacity to feed itself and its huge natural resource endowment.

Agriculture-related industry, according to Minister Biti, is now operating at 70 percent capacity, well above any other industry in the country.

Another contradiction in Mr Biti’s budget review is his claim that liberalising the Zimbabwean economy would benefit the country in this sanctions-laden environment. He stresses that the country should focus more on reviving industry, but fails to mention the most pressing issue confronting the Zimbabwean economy – the issue of illegal western sanctions. The word ‘sanctions’ only appears once and in passing in his current review (Sect. 428). This failure to accept the paralysing effect of sanctions discredits Mr Biti’s budget. Despite denying the centrality and urgency of removing sanctions, the minister then admits that Zimbabwe’s industrial sector was paralysed by ‘lack of lines of credit to support capitalisation’ (Section 77).

Minister Biti also claims that in-country production was affected by imports and that the country should adopt an export-orientated policy, yet cuts duty on computer equipment and consumer electronics (laptops, mobile phones, etc). This is again a strange economic paradox, considering that a tax on these goods would have increased revenue, fattened the fiscus and helped the local consumer electronics industry to thrive.

The minister painfully admits that the tourism sector grew by 6.5 percent in 2009. Then Acting Finance Minister Patrick Chinamasa envisaged these growth statistics and devised the current policy on tourism before Mr Biti was appointed finance minister.

Ironically, Europe contributed the highest number of tourists into the country (42 percent) and America the second highest (22 percent). This is despite the anti-Zimbabwe lobby and the various travel alerts issued by these two countries. This means that Britons and Americans simply do not believe their governments’ claims that Zimbabwe is not a safe destination. The African region contributed 11 percent (with South Africa alone responsible for a huge chunk of that figure). All these arrivals were incident free.

Sanctions render Minister Biti’s budget ineffectual and he subtly admits this by finally adopting a ‘business unusual stance’ (Section 21). The minister should be reminded that this has been Zimbabwe’s stance for the last ten years. Ironically, this is the number of years the MDC party, of which he is secretary general, has been existent. Therefore his 3Rs (Regeneration, Revival and Refocusing) are nothing without addressing the issue of sanctions. How does Mr Biti propose to regenerate, revive or refocus when the country has illegal sanctions hanging over it?

So when Minister Biti says he wants to create a ‘liberalised business environment’ free of ‘unnecessary restrictions and distortions’, he is simply politicking and is contradicting himself. How can a liberalised business environment be preceded by sanctions on every important business entity in the country? Illegal sanctions imposed on Zimbabwe are ‘unnecessary restrictions’ and Minister Biti should vigorously campaign for their removal if any of his budgets are to make sense.

Minister Biti’s fascination with ‘liberalisation’ is troubling given Zimbabwe’s previous experiences with IMF/World Bank structural adjustment programmes. For someone who claims to be obsessed with history (YouTube interview with African Voices), the minister is uncharacteristically being ahistorical. He does not realise that neo-liberal economics do not necessarily demand a liberal political regime (which he envisages through his adherence to what he calls ‘Jeffersonian principles’). In fact to implement the IMF commands in the economic sphere, many countries have had to institute a repressive regime that can put down protests caused by disgruntlement with jobs cuts and wage freezes (instituted as conditions by the IMF/WB in the name of best practice). We saw this in Sri Lanka, among other countries. Strong action was used against trade unions and radical youth organisations to overcome the violent protest that erupted due to the implementation of IMF conditions.

Minister Biti does not realise that his work as minister will be rendered almost useless by IMF and World Bank policies and conditionalities. These institutions not only decide the economic movement in the country, but also advance the social and philosophical view of global capitalism which unfortunately has been rendered useless by the so-called ‘world economic crisis’.

The finance minister should desist from engaging in political debates that discredit his position. One such political statement is that the legal battle between Africa Consolidated Resources (ACR) and government over Chiadzwa diamond mining claims ‘should be settled out of court’. For a lawyer, who claims to believe in the rule of law, this is tragic. The minister is openly advocating executive interference in the role of the judiciary. In any case, Minister Biti has no power to suggest such ideas for the judiciary and his ideas should be dismissed with the contempt they deserve.

It was interesting that Zimbabwe’s diamond certification by the Kimberley Process came just days after Mr Biti joined the widening call for Zimbabwe’s certification. “Mr Speaker Sir,” said Minister Biti in parliament, “if Zimbabwe has complied with the KPCS minimum standards, then Zimbabwe should be allowed to sell its diamonds under the supervision of the KPCS monitor.” This statement is misguided. If Zimbabwe has complied, then there is no need for a monitor, but only for purposes of review. These claw back statements by Mr Biti are very concerning and discredit the work that is being put in to ensure Zimbabwe recovers from a decade long recession.

He then myopically suggests that the Zimbabwe Mining Development Corporation (ZMDC) will be required to pay over its entire net income to the finance ministry and not just any dividends that it declares. This is a misguided suggestion by someone who is advocating ‘financial discipline’ in the economic sector and someone who grandstands about financial prudence. Such a statement is tantamount to imposing sanctions on a government under which he is minister. (Ishiri yazvidyira mazai ayo). The twisted economic logic of wanting the state to intervene (with regards to diamonds) while advocating a liberalised economic regime elsewhere, is yet another paradox that underpins Minister Biti’s economic reasoning.

Maybe the minister can tell us whether the same policy should be proposed for diamonds mined elsewhere in the country, e.g. Murowa, Somabhula, etc. In any case, ZMDC (a company run by the state) is already at Chiadzwa, so he should be fighting for diamond mining elsewhere to be put under state control. Therefore, using the same twisted economic logic, the minister should ask Rio Tinto Plc, Rio Tinto Zimbabwe, Consolidated Trillion Resources and Cratonic (a wholly owned subsidiary of Delta Gold) to pay their entire net income to the finance ministry and not just taxes and royalties. Otherwise, why would he have a selective diamond policy for Chiadzwa except for the reasons of imposing internally-driven sanctions on the government of Zimbabwe.

It is inconceivable that legislators have accepted this review and the budgets to which it refers. This neo-liberal consensus in the august house is frightening and one wonders what else goes through parliament without careful scrutiny. This petit-bourgeois philistine attitude among MDC and some Zanu-PF elements in parliament is detrimental to our core national values and abrogation of our right to self determination.

By failing to make better the welfare of civil servants and communal farmers, who will turn around Zimbabwe’s economy, Mr Biti’s review is ineffective and is an exercise in futility. By failing to address poverty in Zimbabwe and prioritising issues of computer and electronic goods imports, his budget is one of the most regressive budgets we have seen for many years. It is an attack on the low-paid, the unemployed, pensioners, the welfare state and the public sector as a whole.

It is a programme of despair for millions of people who did not cause the problems they face and who have been under MDC-T supported sanctions for a long time. Mr Biti should not be allowed to hoodwink Zimbabweans any longer than he has done thus far by claiming that he is fighting for restoring Zimbabwe’s former economic glory, while clearly using the budget to advance the interests of the MDC-T party.

Simply put, this is not an economic review, but an MDC-T political strategy review. Zimbabwe will simply be put on the road to ruin if such political statements, masked as economic blueprints, continue to see the light of day. The President should immediately summon Mr Biti and ask him what exactly is going on in that ministry; or the prime minister whose reshuffling fetish has gone overboard, should simply replace Mr Biti with a more skilled person from the MDC-T party.


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Itayi Garande can be reached at itayig *** hotmail.com