Rein in govt expenditure, Chinamasa told

HARARE - Finance minister Patrick Chinamasa — expected to present the 2014 budget today — must cut down on “unnecessary” government expenditure and direct funds towards economic revival as well as attract foreign capital, analysts say.

The budget presentation, which had been postponed from the traditional month of November, comes as fiscal indiscipline has been the greatest undoing towards efforts to restore Zimbabwe’s faltering economy.
Takunda Mugaga, an independent economist, said government should rein in its expenditure, particularly on “luxuries” and travels.

“Indeed cutting down on unnecessary expenditures is a requirement,” he said, adding that “however the Zanu PF government does not have capacity to trim on its travel expenditure especially at this time of international isolation for they will travel everywhere they can to gain acceptance and recognition.”

He said “the problem of failing to distinguish between party and government institutions would continue exerting pressure on the expenditure bill.”

“They need to do away with the unnecessary entourage which is disguised as security and media when they will be doing virtually nothing,” Mugaga said.

“Nothing much is expected from Chinamasa. He certainly doesn’t have fiscal space except to introduce cosmetic policies which will not change the status quo of economy,” he said.

John Robertson, also an economist, added that government must privatise parastatals that continue to make losses “yet top managers earn astronomical salaries at the expense of taxpayers’ money”.

“There are many parastatals which can be privatised to offset the expenditure bill. Losses made by these State entities fall back to government and this is burdensome,” he said, adding that “government must put its act together.”

Robertson said the biggest expenditure which needed to be slashed was labour ? with civil servants’ wage bill chewing 70 percent of the revenue.

“There are some ministries which should not even exist at all.

“For example the ministry of Youth, Indigenisation and Economic Empowerment employs a lot of people whose jobs are created for no apparent reason.

“Such a ministry needs to be struck off the government payroll as it is not adding any value to economy,” he said.

“Nothing much would come out of the budget unless austerity measures are adopted to manage financial discipline in government and forego uncalled for expenses.”

Former Finance minister Biti on Tuesday said Chinamasa would present a “fictitious” budget considering that there were no resources to fund it.

“In this era of cash budgeting, you don’t plan to present a deficit-financing budget,” Biti said.

“On Thursday (today) Chinamasa will present a Mickey-Mouse budget because there are no resources to back it up. That’s why Chinamasa had initially refused to present it,” he said.

Biti, who is also MDC secretary-general, condemned government for moving away from the cash budget which the former government of national unity used to a deficit one.

He said since September, revenues have collapsed and the government cannot meet its wage bill and other obligations.

“The government has been borrowing to pay the wage bill, in the process committing the cardinal sin that you do not borrow for consumption or recurrent expenditure,” Biti said.

“To borrow close to $300 million in a space of 100 days is irresponsible and unacceptable, more so when it is being done behind the back of Parliament,” he said, further noting that since there was no Overseas Development Assistance and Foreign Direct Investment flowing into Zimbabwe, it was inevitable that a solution must be found to monetise the domestic debt, which he predicted to be around $1 billion by year end.

“The easy and inevitable solution will be to print the Zimbabwean dollar and unleash the cataleptic energy of the printing press,” Biti said.

 

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