Zim must walk talk on reforms: Parly

HARARE - Zimbabwe must walk the talk on reforms to extricate the economy from the rut amid worsening cash shortages, the Parliament Budget Office has said.

Government spending and foreign debt are too high and urgently needs structural reform, the bicameral Parliament said, noting that the Zimbabwean economy is facing several challenges including cash crisis, capital flight, rising informal sector, underproduction, high import bill, unsustainable fiscal deficit, depressed international commodity prices, unemployment, high cost of business, and debt overhang which is estimated to be over $15 billion as well as limited Foreign Direct Investment (FDI).

The country’s new leader Emmerson Mnangagwa has pledged to grow the economy and provide “jobs, jobs, jobs”.

The once-thriving economy is now seen as a regional basket case.

“The fundamental challenges facing the economy of Zimbabwe demands a ‘hands on’ approach to walk the talk, and a well-focused government to bring the true fruits of the theme ‘Towards a New Economic Order’,” Parliament’s Budget Office said.

“The economy is still facing cash shortages in the formal sector, which retards realisation of some of the measures.”

Since adopting a multi-currency regime in 2009, the US dollar has established seniority as the country’s preferred  legal tender, but local banks have run out of hard currency as the government attempts to accrue forex in exchange for second-rate IOUs (i owe yous).

In 2016, Zimbabwe introduced “bond notes” which were meant to be on par with the US dollar, but have since managed to lose comparative value.

Currently, for every US$100 bill, Zimbabweans pay $127 in bond notes or $145 in Zimbabwe’s electronic currency known as ‘‘Zollars’’, an arrangement which has come to be known as the three-tier pricing system.

The liquidity situation has escalated to such an extent that ATMs are empty and banks only allow customers to withdraw $20 in so-called bond notes a day.

This means people have become unproductive wasting their days away queuing in front of banks.

The impact of the currency shortage has not been limited to everyday consumers and has seeped into other sectors of the economy.

“The country continues to experience a binding liquidity crisis manifested through structural deficiencies and distortions in the economy typified by rising informality (thus presents challenges for domestic resource mobilization) high public debt, dwindling capital inflows, capital leakages, poor infrastructure, institutional weaknesses and weak confidence,” the report said.

Parliament’s Budget Office also noted that it was also difficult to restore confidence in an economy where informal sector is dominating.

Less than 10 percent of Zimbabwe’s people are in formal employment, according to independent economists, and economic growth is flatlining due to shortages of electricity and capital.

For many, the only options for survival are petty trading or chancing it as an illegal worker in neighbouring South Africa, the continent’s biggest economy.

Parliament’s Budget Office also noted that “there has not been much progress with regards to fighting corruption save for the yet-to-be concluded high profile corruption cases under trial and publishing of a list of companies and individuals who externalised foreign currency in March.”

“The government’s commitment to fighting corruption should go beyond the rhetoric, mere setting up of institutions and enactment of laws,” Parliament said. 

“Adequately resourcing anti-corruption bodies and bringing the corrupt to justice should be the priorities. In this regard, several leads to corruption cases brought to the foe by various Committees of Parliament should be investigated and prosecutions undertaken.”

The Auditor-General, Mildred Chiri, has regularly exposed blatant theft of millions by ministers and other government bureaucrats in her damning reports.

Chiri has annually issued adverse reports on abuse of public funds, but they have gone largely ignored with no discernible action taken against culprits.

Last year, the auditor-general’s report on Appropriation Accounts, State Enterprises and Parastatals found 22 ministries out of a total 26 to have abused funds as well as having flouted procurement procedures and governance rules.

Parliament’s Budget Office also noted that the macro-economic framework underpinning the 2018 National Budget remains highly consumption-oriented with the bulk of fiscal revenues going towards funding employment-related costs.

The government  spends more than 90 percent of its national budget on salaries and pensions.

Parliament’s Budget Office however said that there has been notable progress in the area of re-engagement which has seen investors flocking to Zimbabwe.

It also noted that the amendment of the Indigenisation and Economic Empowerment Act was the first signal towards the “open for business” narrative.

Zimbabwe in March changed its empowerment law to limit majority ownership by State entities to only diamond and platinum mines and not the entire mining sector as in previous legislation, according to a government notice.

Parliament’s Budget Office said there is therefore need to focus on efficiency and effectiveness in the implementation of this budget in order to ensure value for money.

“This entails timely exchequer releases to enhance predictability of resources. Inherent weakness in the implementation of the previous budgets including delayed disbursement of funds and in-year expenditure pressures that necessitate budget revision above the approved levels should be guarded against,” the report said.

“Transparency and accountability in revenue generation and expenditure management are critical for successful economic transformation. In line with the new way of thinking brought about by the new dispensation, economic agents must move away from the business as usual approach that they had been accustomed to. Government, on its part, needs to walk the talk with regards to implementing economic reforms and fighting corruption.”

Comments (1)

I personally think that as Zimbabweans, wether we are politicians, business people, workers, vendors, who ever we are, set aside our personal interests and put forward the interests of this great nation and its future. I therefore appeal to political leaders that it is not time to look at personal egos but to consider the future generations, the development and survival of this great nation and at the end of the day we will be proud of our own contributions to this country. You don't need tainted name like how our great Kulu RG tainted his name because of selfish ambitions. Your name, my name, the name Zimbabwe must guarded jealously because history will be writing and that cannot be erased. Who can erase today that RG commanded Gukurahundi in Zimbabwe, I know its something that Kulu does not want to hear but its recorded with writings on the wall, graves and blood all over. Who today would want to vote for anyone with name Mugabe. BE CAREFUL POLITICIANS, YOU NEED TO CONSIDER NOT ONLY YOUR FUTURES BUT ALSO YOUR CHILDREN AND GREAT GRAND CHILDREN.

Bango P - 29 May 2018

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