HARARE - The Bankers Association of Zimbabwe (Baz) says pressure on the fiscus will continue for the remainder of the year due to anticipated decline in revenues against the backdrop of increasing company closures.
Sam Malaba, the Baz president last week told a Confederation of Zimbabwe Industries (CZI) conference in Mutare that the current liquidity challenges will continue into the foreseeable future.
“During the first 6 months to June 2014, total fiscal revenues amounted to $1,718 billion (7 percent below target) against total expenditures and net lending amounting to $1,772 billion, giving rise to a cumulative deficit of $53,6 million.
“As much as $1,65 billion was current expenditure (93 percent), with employment costs and current transfers amounting to $1,53 billion (86,5 percent). Capital expenditure was $107,9 million (6 percent of total expenditures),” he said.
Malaba said government needs to address the structure of current expenditure in the country as it is a major contributor to the country’s economic woes.
“There must be a realisation that you can’t continue with the structure of our current expenditure. Something has to give.
“You can’t spend 86 percent of expenditures on salaries, then you are not supporting the operational structures and you are not paying the debt to the private sector. There must be a restructuring within Government to bring down the cost of our expenditures in terms of salaries,” he said.
Capital expenditure currently stands at $107,9 million.
The Baz boss noted that the prevailing economic conditions mirrored poor policies and the level of unattractiveness the country has, as viewed by investors.
“We have to address the issue of our attractiveness to attract Foreign Direct Investment. We have to respect property rights, we have to respect Bippas and we have to review our indigenisation law.
“An investor will sit back and say I will not come to Zimbabwe if he feels his investment is not safe. So for us we have to make ourselves attractive as an investment destination,” said Malaba.
This comes as a recent report by an American research group revealed the country had become an insignificant destination in terms of Foreign Direct Investment (FDI) in Sub-Saharan Africa due to the quality of governance it has.
The Baz president, who is also Agribank chief executive, urged government to address the country’s debt.
Zimbabwe is currently saddled with an $8,9 billion debt which industrialists claim has “virtually blocked access to international capital markets”.
“The country risks a premium of five percentage points when looking for funding because of the arrears. You can move to the rand system you can’t do away with the arrears.
“No matter which currency you move to, you can’t run away from the arrears. We can’t run away from the International Monetary Fund, World Bank or the African Development Bank either we won’t survive. Even China will tell us to settle our debt first,” Malaba said.