Wednesday, November 28, 2012

(NEWZIMBABWE) MPs slate Zimbabwe's 'supermarket' budget

MPs slate Zimbabwe's 'supermarket' budget
27/11/2012 00:00:00
by Business Reporter

ZIMBABWE’S US$3,8 billion budget for 2013 must shock the government into prioritising revenue generating sectors of the economy, the House of Assembly’s Budget, Finance, Economic Planning and Investment Promotion Committee said Tuesday.

Paddy Zhanda, the committee’s chairman, said it was embarrassing that a resource-rich country like Zimbabwe could stake its economic fortunes on a “supermarket budget”.

Presenting the committee’s report on the budget to the House of Assembly, he said Zimbabwe’s economy could achieve a US$10 billion budget if the government got its priorities right.

“We find ourselves talking about a US$3,8 billion budget which can be equated to the budget of a single supermarket in the UK,” Zhanda told MPs, kicking off a debate on Finance Minister Tendai Biti’s budget statement.

“The issue before us is what can we do with a US$3,8billion budget? We now must look at ways of addressing balance of payments, increasing investment inflows, improve industrial productivity, reduce company closures, create employment and expand the revenue base for the economy.”

He said that the revenue side of the economy has to perform adding that critical sectors such as agriculture, mining and manufacturing need to be incentivised for them to perform.

Zhanda said critical to the economic transformation will be increased performance by all sectors including agriculture, saying the future of the sector lay in both introducing contract farming on all agricultural products as well as import duty on agricultural products.

“We have seen some positives of contract farming in crops such as tobacco, maize and soya beans but we feel this has to be extended to include all agricultural products such as wheat and vegetables,” he said.

“In the same vein, we must also see import duty being extended to all agricultural products. We applaud the decision to have import duty on chickens but what effect will the import duty on chickens have? We must have such duty levied on all agricultural products as a way of incentivising the producers.

“We must learn to protect ourselves; we cannot go on exposing ourselves simply because we are signatories to various trade protocols. The USA is a signatory to the WTO but subsidises its cotton farmers and third world countries feel the pain of that. There is no point in importing cabbages, lettuce, and tomatoes from South Africa which also incentivises its farmers and companies.”

On manufacturing, the committee recommended the establishment of a taskforce comprising the private sector and the government to address some of the challenges.

“The cost of manufacturing in this economy is too high, rendering our exports uncompetitive,” said Zhanda.

The committee recommended DIMAF to be extended to all companies saying the scourge of company closures was not only confined to Bulawayo.

“There are no industries that have been deliberately marginalised, as such DIMAF must be extended to all companies in the country. It is wrong to say companies that are closing are from Bulawayo alone”, said Zhanda.

The poor performance by the country’s key economic sectors saw the country revising downwards its projected economic growth rate from 9.4 percent to 4,4 percent.

Revenue inflows remained low with only US$3,5 billion being collected.

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