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.
Labels: 2013 BUDGET (ZW), MDC, NEOLIBERALISM, PADDY ZHANDA, TENDAI BITI
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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
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Biti growth forecast imaginary: analysts
16/10/2012 00:00:00
by Brian Paradza
ECONOMIC commentators have dismissed as imaginary Treasury projections that GDP growth would reach 9 percent in 2013, saying the forest discounted the potential adverse impact of political uncertainty and increased spending pressures.
In a statement that marked the start of consultations for the 2013 national budget last week, the Ministry of Finance said the economy would grow 8.9 percent which contracted sharply with a more conservative IMF projection of about 6 percent.
But economic commentators said the treasury projection was not achievable considering the uncertainty arising from fresh elections expected in March next year as well as increased pressure on the budget.
Said Harare-based economist Christopher Mugaga: “I tend to go along with the IMF projection. We have elections next year and that in itself dampens any economic prospects for the country.
“So to think of an economic growth of above 5% for Zimbabwe is an exaggeration, we can’t experience such a growth in 2013.”
Another economic commentator, Brains Muchemwa added: “The growth forecasts are too bullish considering that private sector fixed capital formation is likely to remain subdued due to the liquidity challenges that definitely won't go away next year.
“Equally, the misaligned government expenditure in the face of policy makers that do not want to make drastic decisions on civil service reforms means that government expenditure will remain consumptive and therefore will not stimulate the economy that much.”
In July, Finance Minister Biti slashed his 2012 growth forecast to 5.6 percent from 9.4 percent due to a poor harvest and a lack of donor funding and investment.
Other productive sectors also continue to operate below capacity with the mining and the manufacturing sector constrained by the lack of capital as well as power supply problems.
Biti is due to present the budget to parliament on November 15 and treasury officials said there were positive signs, particularly regarding inflation and government revenues.
Consumer inflation slowed to 3.63 percent in August from 3.94 percent previously. The government also projects that revenues should grow to $3.8 billion next year from an expected $3.4 billion in 2012 as authorities crack down on corporate tax defaulters.
Still, the country remains hamstrung by a huge debt burden that is preventing it from securing new aid. Its total external debt was estimated at $10.7 billion, or 113.5 percent of GDP, at the end of 2011. Of this, more than half is in arrears.
Labels: 2013 BUDGET (ZW), IMF, TENDAI BITI
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Parly clips Biti’s wings
Sunday, 14 October 2012 01:28
Kuda Bwititi
Parliament has prescribed a host of new measures ahead of the formulation of the 2013 national budget as it seeks to clip Finance Minister Tendai Biti’s wings and ensure the blueprint is people-oriented.
The new measures will also see the Parliamentary Budget Committee undertaking its own pre-budget consultations which will run parallel to those traditionally organised by the finance ministry.
The committee’s chairperson and Goromonzi North MP Paddington Zhanda (Zanu-PF) said Parliament had come up with the fresh measures to address complaints raised by the general populace last year that its views were not taken on board.
The budget consultations by the committee will start tomorrow with the first meetings set to be held in Marondera and Chinhoyi.
“As part of measures aimed at ensuring that the budget addresses the needs of the people, we have come with a raft of new measures. We want two weeks to carry out consultations and another two weeks of studying the budget when it comes to Parliament,” said Cde Zhanda.
Makoni West MP and member of the same portfolio committee Webber Chinyadza (MDC-T) said Minister Biti had erred in the 2012 budget by coming up with a document that did not address the needs of the people.
He said last year’s budget was a “secret document” which was the prerogative of the minister and not the people.
“Inadequate time was given to approve the budget last year. The Public Management and Finance Act now empower us to critically analyse the budget when it comes to Parliament as well as to ensure that people’s views are incorporated.
“The budget in previous years has been a secret document that the Minister would pass.
Now we are looking at each vote in the budget so that each particular is vote is consistent with the views of the nation,” he said.
Mr Chinyadza said the consultations for the budget were already running late.
“We already have a problem in this country in that the budget consultations start just before the paper is presented and some of the issues would have been presented in Cabinet and Ministers would come up with their votes before public consultations begin,” he said.
Mr Zhanda said Ministers should come to Parliament to defend their votes in the budget, amidst revelations that last year’s bids reached US$22 billion, against the US$4 billion purse that was eventually presented.
Mr Zhanda said aligning the budget to IMF recommendations would be unrealistic, as the world monetary body proposes that an average of 30 percent of the national purse should be channelled to government wages.
“Last year we had 70 percent of the national budget going to civil servants salaries so we cannot call for a downward review to 30 percent yet the workers are demanding a pay increase.
It is those issues that we should look at in the budget even though we may wish to be in line with international best practices,” he said.
Last year Minister Biti presented a budget of US$4 billion which he later revised downwards to US$3,4 billion.
Labels: 2013 BUDGET (ZW), IMF, NEOLIBERALISM, PADDY ZHANDA, TENDAI BITI
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