Policy shift required

HARARE - Finance minister Tendai Biti will soon commence his provincial consultative meetings for the 2013 national budget.

The meetings, which include consultations with sectoral leaders and key stakeholders generally, solicit inputs and ideas that the minister can use as part of crafting his annual budget. How time flies!

We are already thinking about another year yet the wrongs of 2012 are still with us — as glaring and frightening as they are.

Biti has been forced to revise downwards his projections in the 2012 $4 billion budget to $3,6 billion.

All the hopes of spurring economic growth have been thrown through the window largely because of an under performing economy blighted by opaque trading in diamonds whose revenue informed the 2012 budget projections.

Consequently, Biti, again, has had to slash economic growth projections from 9,3 percent to 5,6 percent on account of less than expected diamond revenues.

Unless government comes up with measures to ensure transparency of its diamond mining activities and the entire extractive industry, the nation can be assured of continuous underperformance.

Biti had pinned hopes on expected $600 million diamond revenue but for the greater part of the year, he has been cutting a forlorn figure — failing to have a positive impact in his calls for diamond revenue to be chanelled towards the fiscus.

The $600 million was 18 percent of the initial budget.

A decision to continue with the current approach, where trading of national resources such as diamonds continue to be shrouded in controversy, will definitely see the country being unable to attain its average 7, 1 percent economic growth targets to 2015- under the Medium Term Plan.

Of course a transparent mining sector alone is not enough to turnaround the country’s economic fortunes, when power shortages persist.

Zimbabwe’s policy environment needs a serious relook, particularly on the Indigenisation Act, to give the country the right momentum for growth.

Government has pushed for immediate majority ownership of all foreign owned firms, causing panic among international investors who have adopted a wait and see attitude as they are wary of losing their capital.

This week, the International Monetary Fund (IMF) warned Zimbabwe was this year likely to miss its new 5,6 economic growth target on account of bad policies.

The IMF said Zimbabwe’s position would be worsened by its failure to clear external arrears which now stand at close to $11 billion and have become a stumbling block to the country’s efforts to secure new funding from international institutions. - Staff Writer

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