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Zim fiscal policy is a disaster- Mashakada
22 Apr 2017 at 07:29hrs | Views
MDC-T official Tapiwa Mashakada has described the Zimbabwean fiscal ;policy as a disaster amid escalating cash crisis in the country.
He questioned if the present compendium of fiscal and monetary policies fit and proper for debt and BOP management?
"In fact our fiscal policy is a disaster. It has compounded the national debt. Look at government borrowing especially the issuance of TBs. In 2016 alone government paper amounted to $2billion dollars add the takeover of the rbz debt of $1.8 bn add payment arrears of $1bn add parastatal debt of $3billion and commercial farmers debt (compensation) of $10bn," he said.
"The 2017 fiscal deficit alone was $1.6 billion. In short government does not have fiscal space. Now how about foreign debt which stands at $7billion? The current fiscal policies are not fashioned to promote growth and improve the country's repayment capacity. The indigenization law is a red flag to investors. There is no economic stimulus package hence no exports and no foreign currency to pay back foreign loans. The Lima Agreement was a promise to pay arrears to IMF, World Bank and IBRD."
He said but this promise has not been honoured because government coffers are dry.
"That is the nexus between fiscal policy, domestic and foreign debt. How about monetary policy? Monetary policy has been a casualty of fiscal policy esp the budget deficit. In attempt to contain the budget deficit the Reserve Bank of Zimbabwe has been roped in. The introduction of bond notes as an export incentive has failed to improve the liquidity crunch. Our trade deficit stands at $3bn. The capital account is not performing. Thanks to diaspora remittances at $1bn a year and NGO funds which have kept the capital account ticking. The country receives only $500 million in FDI," he said.
"The major sources of foreign exchange are:tobacco, gold, platinum, chrome. Unless fiscal and monetary policies are synchronized, it will be difficult to manage national debt, foreign debt and BOP."
He questioned if the present compendium of fiscal and monetary policies fit and proper for debt and BOP management?
"In fact our fiscal policy is a disaster. It has compounded the national debt. Look at government borrowing especially the issuance of TBs. In 2016 alone government paper amounted to $2billion dollars add the takeover of the rbz debt of $1.8 bn add payment arrears of $1bn add parastatal debt of $3billion and commercial farmers debt (compensation) of $10bn," he said.
"The 2017 fiscal deficit alone was $1.6 billion. In short government does not have fiscal space. Now how about foreign debt which stands at $7billion? The current fiscal policies are not fashioned to promote growth and improve the country's repayment capacity. The indigenization law is a red flag to investors. There is no economic stimulus package hence no exports and no foreign currency to pay back foreign loans. The Lima Agreement was a promise to pay arrears to IMF, World Bank and IBRD."
"That is the nexus between fiscal policy, domestic and foreign debt. How about monetary policy? Monetary policy has been a casualty of fiscal policy esp the budget deficit. In attempt to contain the budget deficit the Reserve Bank of Zimbabwe has been roped in. The introduction of bond notes as an export incentive has failed to improve the liquidity crunch. Our trade deficit stands at $3bn. The capital account is not performing. Thanks to diaspora remittances at $1bn a year and NGO funds which have kept the capital account ticking. The country receives only $500 million in FDI," he said.
"The major sources of foreign exchange are:tobacco, gold, platinum, chrome. Unless fiscal and monetary policies are synchronized, it will be difficult to manage national debt, foreign debt and BOP."
Source - Byo24News
