National Budget: Brace for bad times in 2017

HARARE - Under-pressure Finance minister Patrick Chinamasa has painted a gloomy outlook for Zimbabwe’s struggling economy, steeply revising downwards the country’s 2016 growth prospects from the previously hoped for 2,7 percent to a mere 0,6 percent — as Zim’s political rot continues unabated.

However, Chinamasa said in his budget speech yesterday that the country’s dying economy would grow by an optimistic 1,7 percent next year, as Zimbabwe also grapples with the twin challenges of deepening political turmoil and a devastating drought that has left an estimated four million citizens requiring food aid.

The lawyer-turned-Treasury chief, who has often won industry’s kudos for his pragmatism despite his principals’ destructive policies, was also man enough to admit openly that the country’s economy was facing “a number of headwinds” that were retarding growth.

At the same time, the International Monetary Fund (IMF) yesterday warned President Robert Mugabe and his close lieutenants against interfering with Chinamasa’s work.

Speaking to the Daily News in an interview, IMF representative in Zimbabwe, Christian Beddies, said it had become apparent that the government was not giving Chinamasa enough room to implement “sound reforms” to revive the country’s dying economy.

“We have seen it happen in the past? The minister proposes something and it gets shot down. Not only does this give the impression that the country as a whole is confused, it also points to a deep-rooted problem that the man is being prevented from doing his job,” he said, noting that the minister was trying his best under difficult circumstances.

“His policies are quite sound. They just need to be implemented. They (Mugabe and team just) need to let the minister do his job,” Beddies said on the sidelines of the Zimbabwe National Chamber of Commerce’s annual economic review meeting in Harare.

Back to the budget, Chinamasa also revealed that the country, despite its recent imposition of import bans, was still expected to record a budget deficit of $1,18 billion this year — more than seven times the earlier forecast of $150 million.

However, this was expected to come down to an estimated $400 million in 2017, even as the minister also revealed that the government’s domestic debt had now ballooned to a staggering $3,7 billion by the end of October this year, compared to $2,1 billion at the end of 2015.

Analysts who spoke to the Daily News said given the grim budget, Mugabe and his ever-bumbling government were headed for yet more confrontations with suffering ordinary Zimbabweans.

They said this was more so after the Reserve Bank of Zimbabwe (RBZ), which introduced bond notes earlier this month to stem a severe cash crunch, was battling to satisfy the high demand of the surrogate currency which has hit the roof.

The analysts also pointed, as a bad omen, to the fact that restive civil servants, whose wage bill gobbled most of the government’s revenue, had also asked the country’s cash-strapped government to pay them more and release pay dates for their December salaries and bonuses which they want before Christmas.

Chinamasa told Parliament yesterday that he expected the local economy to only perform marginally better in 2017 than it had done this year.

“Against this background, the overview for the overall economic outturn in 2016 is for real growth estimates of only 0,6 percent. In 2017, the economy is set to turn around from the slowdown mode to modest growth led by key sectors of mining and agriculture, benefitting from the anticipated normal to above normal rainfall.

“Overall gross domestic product (GDP) growth is, therefore, projected at a moderate 1,7 percent in 2017, also against the background of anticipated moderate improvements in international commodity prices, fruition of planned mining investments and benefits from the ease of doing business reforms,” Chinamasa said.

He attributed the decline in economic growth to adverse effects on agriculture, mining and manufacturing, as well as low domestic production, low incomes, high unemployment levels, liquidity and cash challenges.

In September, Chinamasa had also revised Zimbabwe’s 2016 growth forecast downwards from 2,7 percent to 1,2 percent, citing the impact of a devastating drought on the anchor agricultural sector, weak mineral prices, low inflows of foreign direct investment, the prevailing liquidity crisis and declining domestic demand.

Meanwhile, statistics from the IMF show that Zimbabwe is the only Southern African Development Community economy which is set to contract this year, although regional powerhouse South Africa also remains sluggish.

Economic experts also commended Chinamasa for slashing the civil service wage bill, albeit modestly, from $3,14 billion this year to $3 billion next year, as he strives to restore some of his austerity measures which were reversed by Mugabe last September.

“The anticipated lower provision on employment costs by an estimated $140 million is reflective of financial savings arising from the implementation of the Public Service Wage Bill rationalisation measures,” he said.

In that reversed September mid-term fiscal policy review statement, Chinamasa had introduced a raft of austerity measures, as he valiantly attempted to resuscitate the economy back from the dead.

He had moved to scrap bonuses for this year and next year for all public workers as part of a raft of his measures that included the retrenchment of tens of thousands of civil servants and the cutting of salaries of senior government officials.

But Mugabe’s stone-broke government swiftly reversed all the measures in what was described as a spectacular own goal, which sent shock waves throughout the country.

“After extensive deliberations, cost cutting measures relating to the civil service were rejected and the position of Cabinet is that the minister of Finance and Economic Development did not take into account the rejection by Cabinet earlier on.

“The President and Cabinet want to assure civil servants, farmers and the public at large that these proposed measures are not friendly operative. It is hoped that this clarification puts to rest anxieties that may have arisen within the civil service, the farming community and the public at large,” the government thundered later, to the disbelief of the nation.

Chinamasa bemoaned yesterday the fact that the government continued to have a huge appetite for spending, despite its ever falling revenues which had led to serious shortfalls.

Reacting to the budget, analyst McDonald Lewanika said it was clear that the country was headed for economic turmoil and that long-suffering citizens, who were living in abject poverty, needed to brace for more hardships.

“There are no signs from this budget statement and other policy statements from government that show that the government has the competence and capacity to resolve the economic challenges currently facing the country,” he said.

Mugabe — the only leader Zimbabweans have known since the country gained its independence from Britain in April 1980 — is facing the biggest challenge to his 36-year rule.

The increasingly fail nonagenarian and Zanu PF are battling growing unrest among the country’s restive populace, which blames his government for presiding over the country’s dying economy and the deepening rot in the former regional breadbasket.

Since the economy began experiencing serious turbulence, including witnessing banks running out of cash, the government is under growing pressure as angry Zimbabweans have mounted seemingly unending demonstrations which have, however, been ruthlessly crushed by police.

Comments (2)

Brace for bad times in 2017. Were there ever good times in Zimbabwe since the time Mugabe grew his corrupt government ? I think if we sell this country to Strive Musiyiwa we can all benefit. As it is there is no hope of recovery as long as maBlack Bombers (nhunzi) eZanu-PF are feasting on their excreta they shitted, the country they are proud to call Zimbabwe.

Masamba Akareyo - Tanganda - 9 December 2016

Ofcourse!!!!.Its suffer continue.What wuld yu expect when more than half of revenue is paying IMF debt and the little left is being reserved for a useless murderouse election.How do you then fund gvt ?The current account is bursting in debt.chinamasa may as well cancel civil servants pay for 3months.Bonuses is not the only expenditure to be cut.Cars ,nomore hotel payments, its not only vp mphoko.foreign hospital payments, trips,cut it off,totaly.

viola gwena - 10 December 2016

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