Chinamasa's headache

HARARE - Finance minister Patrick Chinamasa is today expected to come up with some miracles to inject fresh impetus into Zimbabwe’s ailing economy.

Chinamasa’s 2017 national budget presentation comes against the background of an increase in the closure and liquidation of scores of companies and ballooning of unemployment in the past 36 months.

The country is also currently plagued by multiple challenges such as biting cash shortages, high consumption, low financial intermediation, high debt overhang and resultant expensive lines of credit, food insecurity owing to low productivity, low investment, climate change-induced droughts and an erratic rainfall distribution pattern, as well as lack of industry competitiveness due to obsolete equipment and outdated technology.

As such, we are expecting the Zanu PF administration to come up with an expansionist budget to revitalise the teetering economy, which critics say has been stagnant since the fore-closure of the coalition government in 2013.

The majority of suffering Zimbabweans are also expecting the latest budget to take into cognisance Zanu PF election promises, particularly job creation, revival of industries and a full roll-out of economic empowerment policies targeting the poor.

At the moment, the government is struggling with reduced revenue in taxes as they are few firms that are operating profitably, resulting in delayed and staggered payment of civil servants’ salaries.

There is also controversy over the government’s black economic empowerment law which requires foreign-owned entities to cede 51 percent of their stake to indigenous Zimbabweans and the punitive tax regime.

There have been suggestions from other quarters calling on government to impose prohibitive import taxes to protect the local manufacturing industries, particularly the clothing and textile sectors which have collapsed due to cheap imports from the Far East.

It is also our expectation that Chinamasa should prioritise the revival of industries in the country’s second largest city, Bulawayo, previously the country’s industrial hub but has since been decimated by the Zanu PF-led government’s disastrous policies.

However, economic critics charge that no miracles are expected from Chinamasa as the government has failed to improve citizens’ lives in the past 36 years.

Over the past few years, fiscal space has been diminishing due to the economic meltdown. The economy has shrunk to 1,2 percent as at 2016. Revenue flows to the State have dwindled and, worse still, nothing is coming from diamonds.

Technically speaking, the government is insolvent. With a current budget deficit of $1 billion, this means that the budget can no longer accommodate capital projects, which are the basis of any economic growth.

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