Stakeholder input required for MTP success

HARARE - Economic Planning secretary Desire Sibanda says there is need for stakeholders in the economy to synchronise policies for the 2013 National Budget in order to meet the Medium Term Plan (MTP) targets and objectives.

“We need to come up with policies which can be considered for the 2013 National Budget.
“National policy direction and budget allocations reflect national priorities,” said Sibanda during a MTP and Budget synergy workshop.

He added that the MTP was a results-based process therefore stakeholders should take measures to ensure that set targets are attainable.

The MTP is an economic blue print launched mid-last year by Economic Planning minister Tapiwa Mashakada to pave way for various policies and programmes between 2011 and 2015 to address macro- economic challenges critical to economic recovery.

“The recommendations from stakeholders will be included in the national budget in order to achieve our shared vision as encompassed in the MTP,” said Sibanda.

“We were fortunate that we dollarised and we are not going to abolish the multi-currency regime because out of it everything falls into place, thus we will continue using it throughout the Plan period.”

Sibanda said there was need to address structural issues such as implementing an acceptable debt and arrears clearing strategy, prudent fiscal policy and public expenditure reforms among others.

“The country’s debt and arrears at around $8,1 billion is a big impediment. We need to normalise relationships with main creditors to unlock investments into the country,” said Sibanda adding that the onus is on government to reduce country risk and improve in governance and property rights.

“We need to adopt prudent fiscal policy measures focusing on enhancing efficiency, plugging loopholes and minimising leakages. We also have to eat what we kill were public expenditure reforms at legal, institutional, strategic and operational levels are necessary in order to achieve our MTP targets,” said Sibanda.

“Focus on expenditure should be switched more to capital and infrastructure projects.”

He said the implementation of MTP was off target mainly due to lack of fiscal space.

“The size of the national budget is too small compared to the funding requirements of the flagship projects in the MTP. 80 percent of the national budget was recurrent expenditure for the year 2011 and 2012.

Such a scenario is not conducive to moving the economy beyond stabilisation,” said Sibanda.

He added that there was under performance of the National Budget with cumulative revenues recording a shortfall of $244,2 million during the first half of the year, a development that adversely affected the implementation of the MTP flagship projects.

A large chunk was shortfalls on diamond dividends of $229,3 million.

“The government revised downwards the revenue target for 2012 to $3,6 billion from $4 billion and delays in the disbursement of the funds were due to poor revenue inflows to treasury which made it difficult to disburse funds to line ministries timeously,” said Sibanda.

He also highlighted that the continued policies inconsistencies and uncertainties surrounding investment in the country was making it difficult to attract tangible investment and credit lines critical to fund projects and programmes.

The MTP’s key targets include an average 7,1 percent annual economic growth rate to 2015 and growth in the energy, agriculture, ICT, tourism and mining sectors.

However, MTP joins the long list of blueprints aimed at growing the economy still battling to recover from a myriad of challenges such as the country’s failure to meet its average 7,1 percent economic growth, policy discord hampering work in progress, lack of access to cheap finance on capital projects such as dams, power plants, stalled infrastructure development and failure to create gainful employment among others.

These include the National Trade and Industrial Policy, Transitional National Development Plan, Economic Structural Adjustment Programme (Esap), Zimbabwe Programme for Economic and Social Transformation (Zimprest), Millennium Economic Recovery Programme (Merp), the National Economic Development Programme and the Zimbabwe Economic Development Strategy.

Analysts contend that there is an overcrowding of policy documents and yet on the other hand there are no tangible results to support what is encompassed in them over the years gone by.

“The MTP review has got nothing new to offer as there seems to be a repetition of the same things in all the economic blueprints yet a lack of concerted efforts in harnessing financial resources to fund initiatives continues to hinder progress in all those undertakings”, said economist Takunda Mugaga.

The country has failed to attain targets set in the MTP as the economy continues to underperform, particularly in agriculture with reports indicating food shortages in several parts of the country.
Lack of solid financial support has severely hampered efforts to ensure that agriculture remains the backbone of the economy.

Agriculture, initially expected to register 11,6 percent growth, is now expected to decline to minus 5,8 percent.

According to the Finance ministry, poor harvests characterised by erratic rainfall and long dry spells from the end of December 2011 negatively affected the sector.

Mining has however, been projected to grow by 0,8 percent to 16,7 percent from an initial forecast of 15,9 percent due to the high global demand in metals prices.

While the MTP targets an economic growth rate of 7,8 percent this year, government says there will be a slowdown to around 5,6 percent.

Although the inflation rate was in the positive in 2011 and 2012, no new jobs have been created and poverty is on the rise owing to the soaring rate of unemployment and lack of adequate disposable income in most households.

To date only the single-digit annual inflation target of between four and six percent during the plan period is likely to be achieved.

However, the stabilisation of inflation rate largely as a result of the multi-currency regime adopted in 2009 did not necessarily translate to ensuring increased disposable incomes for most households and equitable benefits from natural resources.

The manufacturing sector which had been expected to have recovered from low capacity utilisation levels has lagged behind  due to a number of factors revolving around lack of cheap finance.

Approximately $9 billion in total investment is required to finance the MTP in order to meet the growth and development targets during the plan period.

The MTP was set out in Article III under the auspices of the Global Political Agreement (GPA) premised on the need to support the restoration of economic stability and growth in Zimbabwe.It builds on the foundations laid by the Short Term Emergency Recovery Programme (Sterp) (February-December 2009) and the Three-Year Macroeconomic Policy and Budget Framework (Sterp II).

Most of the inflows to meet the set targets are anticipated to come through the country’s own saving and investment efforts, foreign direct investment (FDI), credit lines and public private partnerships.
Finance minister Tendai Biti had been expecting $600 million from diamond sales revenues, forming 18 percent of the initial budget.

However, trading in the precious stones have remained shrouded in secrecy and this has negatively affected the achievement of an economic growth target  of 7,1 percent during the plan period.

Failure to achieve targets this year has been as a result of a number of factors that include policy discord, lack of coordination within government and also with private sector, low investor confidence owing to indigenisation calls that are threatening to derail gains from remaining foreign investors.

It is expected that Zimbabwe Investment Authority would soon be aligned with the Indigenisation and Empowerment Regulations to address investors’ concerns to enable the country to attract meaningful investment.

During the plan period, a Resource Charter will be developed which will ensure that Zimbabwe’s natural resources will be used equitably for job creation, poverty reduction and sustainable economic development.

However, developments obtaining in Save Conservancy points to a plunder of natural resources and disrespect for property rights as fresh invasions and poaching is now widespread.

As many as 600 workers might lose their jobs and these developments threatening tourism sector which is currently on the rebound with negative publicity.

The MTP targets to achieve an average growth rate of 7,1 percent during the Plan period, single-digit annual inflation, interest rate regime that promotes savings and fosters investment, current account deficit of not more than five percent of GDP by 2015.

It also envisages an average employment creation rate of 6 percent per annum and sustained poverty reduction in line with Millenium Development Goal (MDGs) targets.

The country hopes to attain foreign exchange reserves of at least three months import cover by 2015 and double-digit savings and investment ratios of around 20 percent of GDP by 2015 among other set targets. - Kudzai Chawafambira

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