Business / Economy
Zim Finance Minister faces tough balancing task
21 Nov 2011 at 04:35hrs | Views
Zimbabwe's Finance Minister, Mr Tendai Biti is expected to present an eagerly awaited 2012 National Budget statement this week amid high expectations by the local industry that the budget will stimulate macro-economic growth and consolidate economic gains made so far.
Minister Biti faces a tough task as he tries to strike a balance when sharing the national cake to various sectors of the economy.
The fiscal statement seeks to meet the demands of different sectors of the local economy against a depressed fiscal space.
While the budget will be made at a time when there has been slight improvements in terms of capacity utilisation, which rose to 57,2% this year from low levels of around 10% few years ago, according to the Confederation of Zimbabwe Industries (CZI) survey.
The economy has also experienced a relatively lower inflation rate currently at 4,2% and improved foreign direct investments, lack of lines of credit, reduced demand for goods and services due to the lack of disposable income and uncompetitive interests rates.
Economic analyst, Mr Innocent Makwiramiti believes there is need for the Finance Minister to focus on investing in key capital projects, increase the tax free threshold and review the civil services salaries so as to stimulate economic growth, create employment and increase demand on the local market.
Given the current state of the country's social services including health and education, there is need for the Finance Minister to increase allocations to these key sectors.
Other critical areas which require funding include the agriculture sector, which this year was among the best performing sectors with the tobacco industry alone racking in over US$370 million; power generation and the provision of proper sanitation including clean water.
Empowerment Calling Network Chairman, Mr Charles Nyachowe, who welcomed the recent decision for the unconditional sale of the country's diamonds as a major boost to the fiscus, believes there is need for the fiscal authorities to come up with incentives for the small to medium enterprises in order to ensure that the sector makes a more meaningful contribution to the country's gross domestic product.
In the absence of external multilateral organisation support, the country has over the years been relying on internal sources of finance, and is currently pursuing the cash budgeting strategy.
Observers and economic analysts however have criticised the Mr Biti for failing to come up with policies which stimulate revenue inflows and his pursuit of burdensome taxes which are beyond the sustainable means of the economy.
Critics say they hope, Minister Biti will not use his usual populist approach at the expense of the broader national interests when he addresses the expectant nation this week.
Minister Biti faces a tough task as he tries to strike a balance when sharing the national cake to various sectors of the economy.
The fiscal statement seeks to meet the demands of different sectors of the local economy against a depressed fiscal space.
While the budget will be made at a time when there has been slight improvements in terms of capacity utilisation, which rose to 57,2% this year from low levels of around 10% few years ago, according to the Confederation of Zimbabwe Industries (CZI) survey.
The economy has also experienced a relatively lower inflation rate currently at 4,2% and improved foreign direct investments, lack of lines of credit, reduced demand for goods and services due to the lack of disposable income and uncompetitive interests rates.
Economic analyst, Mr Innocent Makwiramiti believes there is need for the Finance Minister to focus on investing in key capital projects, increase the tax free threshold and review the civil services salaries so as to stimulate economic growth, create employment and increase demand on the local market.
Given the current state of the country's social services including health and education, there is need for the Finance Minister to increase allocations to these key sectors.
Other critical areas which require funding include the agriculture sector, which this year was among the best performing sectors with the tobacco industry alone racking in over US$370 million; power generation and the provision of proper sanitation including clean water.
Empowerment Calling Network Chairman, Mr Charles Nyachowe, who welcomed the recent decision for the unconditional sale of the country's diamonds as a major boost to the fiscus, believes there is need for the fiscal authorities to come up with incentives for the small to medium enterprises in order to ensure that the sector makes a more meaningful contribution to the country's gross domestic product.
In the absence of external multilateral organisation support, the country has over the years been relying on internal sources of finance, and is currently pursuing the cash budgeting strategy.
Observers and economic analysts however have criticised the Mr Biti for failing to come up with policies which stimulate revenue inflows and his pursuit of burdensome taxes which are beyond the sustainable means of the economy.
Critics say they hope, Minister Biti will not use his usual populist approach at the expense of the broader national interests when he addresses the expectant nation this week.
Source - zbc
