2016 National Budget unrealistic

HARARE - Finance minister Patrick Chinamasa yesterday delivered an unrealistic and out-of-touch with reality 2016 National Budget that is not expected to inspire any iota of confidence in the country’s ailing economy.

With all economic indicators heading nowhere and national tax revenues falling short of the 2015 targets of $4,2 billion and economic growth having been slashed by half to 1,5 percent this year, it defies logic that Chinamasa predicted a 2,7 percent growth next year and propose a $4,1 billion budget. 

What boggles the mind is that even simpletons can see that there would not be any growth next year in the absence of strong economic reforms at a time when the country is facing yet another drought in 2016 due to the El Nino effects.

The country’s economy is agrarian-based and there is no way it can grow when the sector is in tatters. The mining industry — another bulwark of the economy — is facing serious threats from declining international metal prices and high production costs.

As long as government continues with its disastrous Indigenisation mantra, lack of policy clarity and inconsistencies in Cabinet ministers’ pronouncements and continued land grabs, we don’t foresee any miracles happening to unshackle this economy from recession.

For instance, in the last four years, over 6 000 companies have shut down, more than 60 000 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.

Zimbabwe is currently at crossroads and is in serious need of economic reforms and astute political leadership to drive this moribund economy forward.

However, the serious infighting in President Robert Mugabe’s post-congress Zanu PF has left the economy being discarded at the expense of factional fights to succeed the nonagenarian leader.

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