Biti tears into Mthuli Ncube

HARARE - Opposition kingpin Tendai Biti has lashed Finance minister Mthuli Ncube for his “wrong economic prescriptions” for the country.

This comes after Ncube’s recent policy measures — which include the introduction of an unpopular two cents per dollar transaction tax — were roundly rejected by long-suffering Zimbabweans who accuse the new Treasury chief of plunging their lives further into poverty.

“The decision to impose that tax … and vary that tax from five cents a transaction to two cents in a dollar is a disaster, ill-thought, ill-informed and ill-founded and we are paying the price for it.

“The challenge in Zimbabwe is of course that of the budget deficit, but the deficit has been created not because we are collecting less revenue,” Biti told the Daily News in an exclusive interview yesterday.

“We are spending too much on the wage bill ... 90 or 95 percent is spent on over 200 000 workers’ wages. And so we have to reduce the wage bill.

“When I was minister of Finance, I believed in a cash budget. You spend that which you have. I believed in fiscal consolidation ... Eat what you kill.

“We managed because I was very clear and I would say no … (with regards to wasteful and ill-considered expenditure),” he said further.

President Emmerson Mnangagwa’s plans to revive the country’s battered economy received a severe jolt after Ncube’s belt-tightening measures — which were announced at the beginning of this month — failed to find resonance with ordinary people and business alike.

Ncube’s measures, which were announced on the same day that the Reserve Bank of Zimbabwe (RBZ) governor John Mangudya presented his post-election Monetary Policy Statement (MPS) — subsequently witnessed the crash of bond notes against the US dollar on the black market.

Since then, there has been widespread panic among consumers that things could deteriorate to the horrific lows of 2008 when hyper-inflation decimated the Zimbabwe dollar and emptied supermarkets.

Biti said Ncube wasn’t likely to succeed in pulling the economy out of the woods because he was focusing on “taxing people instead of cutting government’s wasteful spending”.

He said further that Ncube’s assurances that his measures would bring down the prices of basic consumer goods were futile as the country was “at the cusp of another economic hurricane”.

“The prices can’t go down because the cost of the US dollar can’t go down, and the US dollar cost can’t go down because we are not importing anything that will increase our supply, and we are not attracting any FDI (Foreign Direct Investment) or overseas development assistance,” he said.

Biti was credited with steadying the country’s economy which had tanked to historic levels due to hyperinflation in 2008, which forced both Zanu PF and the MDC to the negotiating table where an agreement was reached to form a government of national unity (GNU).

When he left the government in 2013, Treasury had $6,5 billion in its coffers, while the State’s domestic debt was a mere $275 million.

Today, the government has less than $200 million import cover and a gigantic $10 billion in domestic debt alone.

* Read Biti’s full interview in tomorrow’s Daily News On Sunday.

Comments (6)

That's fascinating. A holder of a 3rd class law degree now wants to lecture a professor of economics and finance on what should be done. My foot.

willo - 20 October 2018

Biti did a wonderful job while Minister of Finance - you could deposit a USD one day and get it out of the bank a week later. Today you deposit a USD and the next day you are unable to even take out bond notes !!?

ace mukadota - 21 October 2018

@ Willo I think there is something wrong with you, people are suffering there is no cash in the banks, but urikungo wawata, economics my foot, we want people who can revive the economy ye lizwe, Biti did a good job most the people who are better off now made most of their money during the GNU, mari yaivepo ende yaitenderera.Ikhozvino kunongodya imimi vana willo mazanoids chete.

Siyathemba - 21 October 2018

Being a professor of economics does not mean having answers for our economic problems which appear extraordinary;only a proper foresight with some economic skills or understanding put any expert in a proper position to deal with the issue.If you want to take it correctly you find that Biti is talking sense here,while Mthuli Ncube seems not to understand what has pushed this economy into a crisis.Clearly as Biti pointed out,itz the too big for the economy recurrent expenditure-wages bill etc,which is normally financed within the capacity of taxes collected-this animal called deficit spending actually unacceptable.One way for Mthuli to achieve the goals of economic recovery to advise the president to down size the bloated cabinet even up to 10 or 9 ministries;to cut expenditure on foreign trips by the president himself,must only engage on necessary few trips-once or twice per year. Mthuli must in the same vein advise to reduce state representation in foreign lands, opting instead to combined representation to 4 ,5 or 10 countries put under one embassy or choose only important countries to install/open embassies. Laying off redundant workforce is also an option.So Biti is dead on the point;down size to expenditures contained within the taxes collected-this does not need increasing taxes but stop importing luxuary vehicles for gvt bosses & traditional leaders;any such irrelevant related costs-their entertainment etc but increase in public investments-roads & other infrastructure; social services.encourage productivity in businesses eg subsidies;overally this puts the economy in the correct trend

addmore gudo - 21 October 2018

Ana Biti make it sound as if the economy can be fixed that easily, if Zanu starts firing civil servants to reduce the wage bill nhasi they will be complaining the loudest. THe honest truth is the economy will not be fixed without some very unpopular measures, but he is right in that it wont be fixed either without Zanu trimming its excessively corrupt elements out and some heads actually rolling . The cartels that Zanu has and has left operating for political expedency they should start getting rid of them and they should truelly listen to their finance minister and actually implement his ideas

Lucy - 22 October 2018

vana Willo havana nyaya kungoshoropodza level dzekudzidza kwevamwe hazvide kuti which level of degree do you have Mugabe is most educated akaitei nyika kuchema nhasi imhaka yake ndozvakatiitisa varombo izvozvo zvekuteerera Bob tichiti ndiye akadzidza iye achiuraya nyika nedzidzo yake zuro uno Biti wacho ari finance minister makadya dhora nhasi ndopaunoti heee a holder of level 3 degree shame on you

Innocent - 22 October 2018

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