Hopeless budget

HARARE - Finance minister Patrick Chinamasa yesterday presented a $4,1 billion 2014 national budget that experts said failed to inspire confidence and which he admitted was policy-based and grossly short on funding.

Chinamasa hinted that government would have to come up with a supplementary budget soon if funds are remitted from a diamond auction held this week in Antwerp in Belgium.

He said out of the $4 billion budget, $3,5 billion would go towards recurrent expenditure — crowding out pressing needs — particularly to do with economic revival.

John Robertson, an independent economist, said the 2014 budget does not spur growth in the economy following government’s insistence on the controversial indigenisation policy.

“There is no way we are going to achieve the 6,1 percent growth rate when we are stifling growth in the mining sector by insisting on the 51 percent local ownership on mines,” Robertson said.

“Which investor would be willing to put 100 percent of their money, take 100 percent of the risks and only retain 49 percent of the profits?”

Christopher Mugaga, another economist, said it was an “ambitious budget.”

“He concentrated on trying to remind the MDC that they (Zanu PF) can do it alone instead of proposing substantive policy prescription,” Mugaga said. “How could he fail to come up with policies to attract Foreign Direct Investment (FDI) in mining and financial service sector which are apparently anaemic of liquidity. The assumption of a $1,3 billion debt is not a solution or way of capitalising the central bank, it is just reversing the approach to technical insolvency by the apex bank.”

Robertson noted that Chinamasa did not do what was necessary, which is encouraging FDI.

“The country will not meet the set targets on mining, agriculture, manufacturing because there is no funding,” he said.

Tendai  Biti, the former Finance minister, dismissed the  2014 budget.

“How does minister Chinamasa celebrate this hopeless budget considering that he has given $100 million towards the informal sector without supporting the formal industry? This is the most irresponsible budget he has presented. It is just a clueless and hopeless budget,” Biti said.

He said the budget was “anti poor and anti-people.”

Eddie Cross, Bulawayo South MP, said: “Chinamasa had a difficult task today. He had to balance heavy demands on expenditure side against limited revenues. I think the forecast budget for this year is quiet ambitious."

“The measures he has taken to stabilise the banking industry are extremely important, particularly on the Reserve Bank. However, some of the proposals such as the reaffirmation of the indigenisation policy and imposing mineral taxes are major impediments in attracting investment,” the economist added.

Simbaneuta Mudarikwa, minister of State for Mashonaland East, described the spending plan as a “people-oriented and realistic budget.”

“It has got the elements of Zim Asset which were endorsed at the heroic (Zanu PF) conference in Chinhoyi, so it is a realistic budget,” he said.

“So the element of having money directed to artisinal miners who are our people in the rural areas which means everybody is now masters of their own destiny, financed by government.”

Biti said that there was no clear explanation on where the budget was going to be funded from given  that there was already a $130 million deficit on the 2013 budget as of October 30.

“In that respect, it is a smokes and mirrors budget,” Biti said.

“It is going to be unfunded. The aspect of it being so viciously anti-poor trying to tax musicians and imposing capital gains tax on high density suburbs, I think it is a disaster. It’s a clueless budget and it celebrates mediocrity,” he said.

“The underlying assumption being made of a projected GDP growth rate of 6,1 percent for next year are unrealistic. The question many would ask wouldbe, ‘what is going to change next year which is not in 2013 if we are going to have a growth rate of 3, 4 percent?’

“So clearly, the projections are false and fictitious. The country is starved of capital that is why we have got a modest budget. Under the circumstances, the budget should have encouraged private capital to flow into Zimbabwe, but regrettably the head lying of this budget is the vicious statements made on reconfirming the agenda of indigenisation,” said Biti, adding that “it is the wrong policy at the wrong time.”

Supa Mandiwanzira, deputy minister of Media, Information and Broadcasting Services and Nyanga South Zanu PF MP, said the budget inspired confidence as it did not rely heavily on foreign funding.

“It is strengthening the resolve of our people and our country,” Mandiwanzira said.

“We must utilise our resources for our own economic good. We have to do things on our own.”

He said the budget was realistic in that it was encouraging Zimbabweans to use their own resources.

“Under the circumstances where we are still under sanctions from the United States and the European Union, it is a very realistic budget,” he said.

Joseph Chinotimba, Buhera South Zanu PF MP, said Chinamasa was one of the best Finance ministers since independence.

“Everything he presented was the best,” he said. “Zvasiyana nezvaBiti (It’s a welcome departure from Biti’s budget presentation.) He spoke what resonates with the people of Zimbabwe. If implemented, it will make everything right.”

Nelson Chamisa, MDC MP for Kuwadzana described the budget as a “vampire budget” sucking blood out of the poor.

“Chinamasa is proposing taxing the poor people heavily who could have sold their properties and also entertainment  and artists,” he said.

“They have no idea on how to run this economy and this is why we are having such a bad budget, which is not what the country requires at this moment.”

*To view the full budget statement please click: www.zimtreasury.gov.zw/budget-policy-statements?download=153:the-2014-national-budget

Comments (18)

Biti is saying $100 million is too little. When he was the Finance minister he only allocated $10 million. Apparently it was Chinamasa who instructed Biti to raise $200 million locally to fund elections.

tarzan - 20 December 2013

Recycled people can only produce recycled budgets. Zimbabwe needs new crop of leaders who will bring new ideas and new budgets.

Edzai - 20 December 2013

Behold, Chinamasa is smiling.

Che Guevara - 20 December 2013

The underlying question is how is the projected 6.1% growth going to be achieved. The recently held Antwerp auction of diamonds gives a gloom picture. The Secretary of Mines disclosed that the germs were of poor quality. Where is the growth really from? At 6.1% target lets compare this to the Election Manifesto which predicated job creation and a $2 trillion GDP by 2018!

gushungo - 20 December 2013

I agree the forecasted growth is impossible, so why lie in the first place? To create hope maybe, but one can not live on hoping forever. Secondly the indeginisation mantra needs a new name or to be re-thought. It is difficult to market it in its present form, especially the 51% threshold. Its a gamble which is proving costly for generations to come. Thirdly Chinamasa should have opened to the private sector the portable water & electricity production and distribution industry. Govt will never, not in our life time, manage to produce enough water and power. These things are needed for industry urgently, in addition to finance.But Chinamasa said something very important which many people fail to appreciate: Banks need to re-invent themselves. Zimbabwe's economy is now almost 90% informal. If banks continue to use medieval approaches, they will continue to sink. There is enough money circulating informally to oil minimum transactions and liquidity needs. Why should I keep my deposits in banks which lend to their own pals at my expense? Some people have house title deeds and would like to borrow for short to medium term business capitalisation, then some banks tell to go to hell. I and some 10 friends formed a savings society depositing at least US2000 monthly for 12 months, when one of us went to a certain bank to borrow just US5000, he was shown the middle finger. We disbanded the savings account, withdrew all our money and shared the proceeds. It will be long before we offer our money to a bank to own lend to its managers' pals.

Devils's advocate - 20 December 2013

Chinamasa wants Banks to go broke by lending what he calls SME when he is talking of siya so, serious which serious bank can lend money to those guys who keep their money in their trunks. If they go banking they will definitely get funding. Is it difficult for Chinamsa to realise that money in banks belongs to depositors, imagine you can't access your money because the bamk has loaned a siyaso guy swho they cannot even trace in the Mbare hostels?

Maita Manyuka - 20 December 2013

I wonder why people cannot analyse issues not along political lines?You can clearly tell that people like Chinotimba do not have anything good about the budget except that it has been proposed by one of their own.What exactly did he understand?As for Biti, i think you are just criticising for the sake of.I wonder if you would have done better?However, I acknowledge you did well during your time.Let's give Chinamasa a chance.We will surely see what he will come out with.

Tahir Iqbal - 20 December 2013

Typical of your paper, if this was presented by the former fridge defecating finance minister the headline would have quite the opposite. This paper is surely nuts.

reason - 20 December 2013

Biti is just a bitter fellow. Can he just proffer just a single alternative? For instance, how he would capitalize the RBZ. Can he tell the nation why Indigenisation is a wrong policy at the wrong time? As for John Robertson and Edd Cross, they are sworn enemies of anything ZANU PF. Therefore, please do not take them seriously.

ivhuraramba - 20 December 2013

Gukurahundies seem to think foreign investors are desperate to invest in Zimbabwe, that they will do so at any cost. Its only those countries with OIL, where investors ignore all other impediments!!

PHUNYUKABEMPHETHE!!! - 20 December 2013

There is no cash in the banks for people to withdraw their deposits. This budget speech is really worthless! How does the minister expect a 6.4 percent growth under these circumstances? He is just tossing figures around without much calculation based on the reality of facts on the ground. The economy is in a serious state of decline and he wants to make us believe that the fictitious figures of improvement will miraculously bring food into people's houses.

Chenjerai Hove - 20 December 2013

The govt continues to ignore the power crisis.......all these grand plans will come to nothing if the current power crisis is not resolved. It seems as if this budget was formulated to buy time....God knows for what ?....just trying to pacify the povo maybe?

Mukwerekwere - 20 December 2013

So if 3.5 billion goes to recurrent expenditure is the Minister telling the nation that the current chaotic situation in the following area will continue: 1. Health delivery system. 2.The state of our roads which have become the biggest cause of death. 3. The unemployent rate. 4. Power shortages. 5. Company closures countrywide. 6. The food insecurity threatening millions. A government that fails to address issues that directly affect its people is not a Goverment but a Mafia.

Ziziharinanyanga - 20 December 2013

rinemanyanga hariputirwe.the naked truth will b out soon.thecountry is heading towards a total shutdown.

ANDY K. - 20 December 2013

Oooh tym will tell. For the past 30 years its the same story. But the gud part is this tym Nikuv does not work

Ririmugedhi - 21 December 2013

Vose vari kucommenta negatively makableya. Ndimi vanakukurumidzakumedzakutsengamuchada. Zvamboti zvadii panhanho ino?? Mati maoneyi kana kuziveyi. Iye ambonyora article iyi akatonyorwa here kuti anyore headline yakapusa(absurd) kudaro. Zvino hokoyoyi, bvunzai Caeser Zwayi.

Hlongwane Spinach - 21 December 2013

There is an old hit song by British outfit, Hot Chocolate called "Going through the motions"..Chinamasa would not care one hoot whether people believe this budget worse if the line ministries use it as a plan..its all one big joke. This is what happens when people want power for its just its sake! They dont give a damn whether people consider their budget is an acceptable and credible plan..they are just going through the motions and the devil get the hindmost!

gutter poet - 23 December 2013

Indeed Chinamasa& all the murderous ,thieving Zanuiods are Economic illiterate as Dr Ibbo Mandaza suggested.Above all Chinamasa is a such an incompetent Lawyer ,one really wonders how he passed the bar at the University of Rhodesia.Chinamasa Lawyer risingagoni Chirungu.His fictitious budget doesnt simply add up coming from amurderous ,fraudulent Zanuiod .Zanuiods think that they could NIKUV the economy how stupid & misguided they were.Zimbabwe once again is headed towards the economic doldrums.

Dr ZVICHAPERACHETE - 23 December 2013

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