Biti unveils $3,8bn budget

HARARE - Finance minister Tendai Biti yesterday presented a $3,8 billion 2013 national budget, with key reforms expected in the banking sector.

While the budget remains largely unchanged due to depressed fiscal space and lack of credit lines, Biti proposed a cocktail of measures to bring sanity into the banking sector.

“Where there is market failure, regulatory intervention is inevitable,” Biti said.

The Finance minister noted that government has already implemented an upward revision of capitalisation requirements, called for the repatriation into Zimbabwe of 70 percent of all Nostro Accounts and enacted a new Deposit Protection Act.

“We are also in the process of crafting detailed amendments to the Bank Use and Promotion of Anti-Money Laundering Bill soon to be gazetted, to further combat money laundering and financial terrorism,” he said.

He announced major amendments to the Banking Act to deal with issues of corporate governance.

He also announced the establishment of a Banking Ombudsman and establishment of a Credit Bureau.

To help cultivate and increase depositor confidence in the banking system, Biti said no bank charges should be levied on deposits up to a maximum of $800.

“Any term deposit of $1 000 and above held over a period of at least 30 days and above should attract an interest of at least four percent per annum and that a debit card be mandatorily issued in respect of all savings or current accounts held by individuals,” he said.

On interest rates, Biti said the large discrepancy between deposit and lending rates was clear demonstration of market failure.

He said government will be coming up with a Statutory Instrument informed by a Memorandum of Understanding (MoU) between financial institutions and the Central Bank.

“The effective date of the Statutory Instrument will be January 1, 2013,” he said.

The MoU between banks and the Reserve Bank will inform the thresholds of applicable fees, charges and interest rates to be specified in the Statutory Instrument.

Commenting on the budget, Shipping and Forwading Association of Zimbabwe chief executive Joseph Musariri said the disparity between revenue collection against inflow of imports points to pilferage within the economy.

MDC secretary for economic affairs and Bulawayo South MP Eddie Cross said he was disappointed with the economic growth estimates which highlighted the need to seriously fix the politics as quickly as possible.
“I think the minister has done a good job allocating scarce resources, though ministry of Defence got too much money and I was unhappy about that,” he said.

“The billion dollars allocated to education is tremendous and we have broken the billion dollar mark.
“What was also remarkable is the knowledge that the international community are funding 50 percent of our health budget and I think those are positive features,” said Cross.

Cross added that the minister had done a reasonable job under difficult circumstances.

“I am glad about the measures being taken on diamonds but I still think the minister is underestimating the total value of diamond production.

“I believe the actual value of diamonds is much more substantial than he has stated in his statement.”
On the proposed reforms of the banking sector, Cross said the sector should be allowed to operate under free market forces.

“I think this is dangerous. We should leave the system to determine its own basis of trading and I don’t think this strong interference is healthy at all,” said Cross, adding the measures will undermine the banking system and this will be a subject of discussion. - John Kachembere and Kudzai Chawafambira

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