2016 National Budget: What Zim needs

HARARE - As the country prepares for the presentation of the 2016 National Budget, it is hard to imagine any period in the history of this country when the economy has been in such a structural comatose and disequilibrium.

Never too has economic failure and fatalism been hid and shrouded in the nausea of recovery propaganda and dishonesty from the government itself and key international agencies that ought to know better. At the epicentre of the economy’s structural challenges is simply the fact that due to self-induced policy distortions, production and output has collapsed whilst capacity utilisation is hovering at less than 15 percent.

In the last three years, over 6 000 companies have shut down, more than 40 000 employees have been retrenched and many companies have simply disinvested from Zimbabwe.

The collapse of output has been exacerbated by the failure of agriculture and indeed of the land reform programme, which lacks a sustainable business model that includes finance, marketing and infrastructure. The collapse in output has seen massive deindustrialisation and informalisation of the economy with 91 percent of the population now deemed to be in the informal sector.

The slowdown in output has been in existence since 2012 and therefore the economy has been in a recession since then.

That recession, has been characterised by persistent deflation, weak aggregate demand, continued tight liquidity conditions, weak international commodity prices and inadequate external influence.

To compound the situation has been a dramatic collapse in electricity output and contradictions arising from an over-valued USD currency.  Public finances have been hard hit with massive declines in income tax and VAT collections. 

The 2016 Finance ministry Budget Strategy Paper, anticipates revenues of $3,58 billion, a far cry from the original 2015 anticipated revenue of $4 billion. The fact of the matter is that the projected revenue for 2016 is overly ambitious and unrealistic and any budget beyond $3 billion will be fictitious.

GDP growth rate has entered into red figures with the outlook period to 2020 being as bleak as it is unwelcome. GDP growth rate in 2015, despite myths being peddled around, will be at least minus 3 percent with further declines guaranteed and inevitable in 2016.

The suggestion in the ministry of Finance Budget Strategy Paper, that GDP growth rate in 2016 will be 2.7 percent is ridiculous, dishonest and destructive.

The truth of the matter is that Zanu PF cannot run this economy. It lacks the competence, the cohesion, and the desire to address the same. The 2016 budget will no doubt contain high sounding hyperbole meant to hoodwink, a naïve and gullible international community that has now chosen accommodation over confrontation and in the process plunged into a moral hazard.

But beyond idioms of deception, the budget will not address key imperators necessary to take this country out of recession. In my view, an honest budget should thus focus on the following:

*A return to the basics of a balanced budget “we eat what we kill”

*Colossal reduction of recurrent expenditure particularly wastage expenditure on travelling, vehicles, excessive diplomatic missions, parastatals and patronage.

*The immediate removal of the over 200 000 ghost workers on the Civil Service Payroll in order to reduce the government payroll to 30 percent of expenditure and 8 percent of the GDP.

* The injection of capital in the distressed and marginal industries as a major priority.

* Repealing of the Indigenisation and Empowerment Act.

* Paying urgent attention to competitiveness and the ease of doing business in Zimbabwe. 

* Investment in Public-Private-Partnerships (PPPs) and Build-Operate-Transfer (BOTs) particularly in the infrastructural sector.

* Removal of the corrosive and protectionist taxes and duties.

* The provision of title to landowners to enable land to be used as collateral as a means of financing agriculture.

* Increasing transparency on mining revenue particularly on diamonds and platinum

* Investment in social services particularly welfare, health and education.

* Revisiting the informal sector and investing in Small to Medium Enterprises (SMEs), and making them bankable and formalised.

In conclusion, it is essential to note that the Zimbabwean economy is prone to cyclical recessions that quickly sink into cyclical depressions.

These depressions tend to last for periods between 10-15 years. The last time around the crisis lasted for an 11-year period, 1997 — 2008, the period in which the economy lost 60 percent of its value. We have entered into yet another cycle of depression that started in 2012.

Left at the mercy of Zanu PF, this crisis could last another 10 years. This thought and status quo is unacceptable to all right-thinking Zimbabweans. 

The most surprising thing about the Zimbabwean economic quagmire is not that Patrick Chinamasa and Zanu PF have failed, this is not news at all; it is the inability of Zimbabweans to stop this rot.

An urgent political solution is an imperator.

Comments (7)

Politics won't allow Chinamasa to do the right things.

citizen - 26 November 2015

"Never too has economic failure and fatalism been hid and shrouded in the nausea of recovery propaganda and dishonesty from the government itself and key international agencies that ought to know better. '' There, right there! is where government needs to face the reality of what is going on. To be honest, bob just needs to resign because with him and his lack of understanding of economics at the helm, we are not going to get any better.

obama4eva - 26 November 2015

I wander why people can't see the contrast between Biti & Tsvangirai. It's very clear this is the man we need, Tsvangirai knows none of this, I don't remember Tsvangirai offering an sound economic idealogy. It's always about his grassroots support, Tsvangirai is clueless he won't make much difference if given a chance, that's a fact!

Lyon - 26 November 2015

God is the one who rules the whole earth........God brings down rulers and turns them into nothing......(Isaiah 40:22-23). Be a peace maker and focus on helping the poor among you then God will give you the right ideas, and don't expect anything from God if you are motivated by greedy in your business dealings and cheating and not paying your workforce.....

Dee - 26 November 2015

MUGABE RIGGED THE 2013 ELECTIONS BUT HAS RIGGED TO RIG ECONOMIC RECOVERY!

Wilbert Mukori - 27 November 2015

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Goal Worth Global Network Employment Agency - 28 November 2015

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