Maravi

(NEWZIMBABWE) Tough choices as Biti presents 2013 budget

Tough choices as Biti presents 2013 budget
14/11/2012 00:00:00
by Gilbert Nyambabvu

FINANCE Minister Tendai Biti presents his 2013 national budget Thursday under pressure to fire-up a stagnating economy as well as find money for elections and other pressing expenditure demands on an increasingly sparse government purse.

If it’s any comfort however, the treasury chief will address a nation decidedly low on expectations when he makes his stand before Parliament.

His 2012 budget went off the rails midway through the year while the economic recovery of the last few years has suddenly hit the skids.

Key economic sectors such as industry underperfromed, hamstrung by a myriad of problems, among them the lack of capital as local financiers either lacked the capacity or just couldn’t be bothered and external credit lines proved impossible to secure.

[That's because ZDERA is still in place, put there by the MDC themselves. - MrK]

Agricultural output also took a huge hit from inclement weather conditions with the World Food Programme (WFP) estimating that some 1.6 million people would need food aid between now and the next harvest.

As such, not many were surprised when Biti was, last week, forced to concede that GDP growth would be nowhere near his initial 9.4 percent forecast saying: "New information shows that the growth rate of 5.6 percent earlier announced in the mid-May review will likely be revised downwards to around 4.0 percent.

Revenue projections for the year were also pegged back to US$3.6 billion from about US$4 billion with the minister announcing that the government was staring at a US$400 million budget black hole in the period leading to the end of the year.

Tourism and mining were among the few bright spots with the latter expected to grow by 16.7 percent, up from the initial forecast of 15.9 percent although productivity continues to be affected by unreliable power supplies and unending liquidity problems in the economy.

Company closures

Industry and other productive sectors however, remain in desperate need of capital to boost capacity utilisation. Confederation of Zimbabwe Industries president Kumbirai Katsande said companies were struggling to stay afloat in an increasingly difficult operating environment.

“We see it in these companies folding up, declining capacity utilisation and declining employment levels. You just have to talk to NSSA, they will tell you how many companies are winding up,” Katsande said Wednesday.

But the CZI chief and his colleagues will know that there is little prospect of relief from Biti.

The minister will, again, be forced to commit most resources to recurrent expenditure with the state wage bill alone accounting for more than 60 percent of government revenues.

He has also pledged to pay bonuses to state workers this year but a proposal to offer them inflation-linked wage increases in 2013 drew fire from the estimated 260,000 civil servants who spent most of this year sniping at the government for a near-doubling of their current salaries.

Even so, civil service salaries may not be the most immediate of Biti’s worries. More significant are matters political; in particular the $219 million tab for a constitutional referendum and fresh elections expected to be held in March.

According to the Zimbabwe Electoral Commission, the referendum, which President Robert Mugabe says should be held this year, will set the country back a hefty $104-million, while the elections will require about $115-million.

Election finance

Biti has since warned Cabinet colleagues that there was no money for the referendum and the new polls and proposed that the country must look to foreign donors for assistance or consider deferring both processes altogether.

The suggestion was emphatically shot down by Zanu PF, with politburo member, Jonathan Moyo, insisting that: "Zimbabwe is not in the pockets of donors. The money for elections is there. We are going to have the elections once the President proclaims the dates.”

Justice Minister Patrick Chinamasa also said Wednesday that Biti had to “ensure an adequate budget for the holding of harmonised elections next year”.

Zanu PF insists new elections must be held to end what it now describes as an unworkable coalition arrangement with the MDC formations, blaming unending disputes and disagreements on policy and other differences.

Forced on the parties by the regional SADC grouping after violent but inconclusive elections in 2008, the unity government was expected to help ease political tensions in the country and put the economy on a path to recovery and growth after a decade-long recession.

Once the political and econmic situation had stabilised and a reforms implemented to help ensure an indisputable election, new polls would then be held to elect a substantive government.

Political tensions have since eased significantly despite fears of renewed clashes as campaining begins for the March elections.

But, on the economic front however, the coalition administration has little to show for its three years in office.

The decision to ditch the Zimbabwe dollar for much more stable foreign currencies helped put a stop to world record inflation.

Zanu PF however claims credit saying Chinamasa introduced the measure as acting Finance Minister before the coalition government assumed office.

Again, while the economy has recorded consistent, if marginal, recovery and growth since 2009, this has not translated into new jobs and unemployment remains very high with the large majority of Zimbabweans still struggling to put a meal on the table.

Labels: 2013 BUDGET (ZW), TENDAI BITI

posted by MrK @ 5:41 PM