(NEWZIMBABWE) We’re running ‘feja feja’ economy: Biti

We’re running ‘feja feja’ economy: Biti
15/11/2012 00:00:00
by Staff Reporters

FINANCE Minister Tendai Biti has said the economy would grow by 5% next year but warned that the prospects could be scuttled if elections planned for March turned violent.

Presenting what would likely be his last budget statement to Parliament Thursday Biti said: “Growth in 2013 will be 5 percent and this is a disaster. We’re killing a rat, but eating an elephant.”

And in the spirit of “eating an elephant”, Biti offered the country’s working but struggling majority a US$1,000 tax free bonus adding that teachers would also be exempted from ZIMRA taxes.

“The non-taxable bonus is now up to US$1000 (but) Caesar will not be getting what belongs to him in this regard,” he said.

Attention will however, be focused on the continued increase in recurrent expenditure, in particular the government’s ballooning wage bill.

Some 73 percent of the US$3.8 billion revenues expected in 2013 would be taken up by salaries for state employees who have already rejected Biti’s proposal for an inflation-linked adjustment.

“We are running a feja feja economy Mr Speaker Sir,” the Treasury chief said referring to a projected US$260 million deficit.

“Already factoring in salaries for the civil servants which amount to US$2,6 billion and if you subtract from our project revenue of US$3,6 million you will be left with something around US$700 million to go towards line ministry operations.

“The US$700 million is equal to what we have already spent before we bring in extra challenges such as the referendum and the election to be held next year. Kuchave nekugeda geda kwe meno.”

Biti however, warned that a repeat of the violent presidential run-off election of 2008 would "collapse the nascent foundation we have built over the last three years."

Zimbabwe is expected to hold elections sometime next year to choose a successor to the country's shaky power-sharing government formed by President Robert Mugabe and long-time rival Prime Minister Morgan Tsvangirai.

Biti did not say how much he was setting aside for elections but insisted he would find the cash to finance the polls and a constitutional referendum next year.

"You can’t have peace unless you pay for it,” he said. “We will have to fund a referendum and an election. Those elections must be free of violence. Violence is a major threat to the economy.”

Zimbabwe is also spending 8.6 percent of GDP on imports, a situation Biti said needs to be addressed: “ “For every $1 coming into the country $3 is going out.

"Our imports averaged over US$7 billion whilst our exports only averaged US$4,9 billion representing 8% of our GDP going to imports. This isn’t sustainable and we have to deal with the supply-side of the economy.”

The country’s economy is showing signs of recovery but most companies are still operating below capacity hamstrung by unstable electricity supplies, lack of funds and high labour costs while others have pulled down the shutters or relocated to neighbouring countries.

Much anticipated foreign investment has not been forthcoming with potential investors seeking reassurance over a law which compels foreign companies to sell their majority stake to locals.