News / National
MDC-T dream of a $100 billion economy
30 Apr 2017 at 14:11hrs | Views
Daily News staff writer Blessings Mashaya speaks to the opposition MDC shadow Finance minister Tapiwa Mashakada. Below are excerpts of the interview.
Q: Do you think Finance minister Patrick Chinamasa has done enough to solve the country's economic problems and the current cash shortages?
A: Since 2013 the economy has plunged into a prolonged deflation because of low confidence levels. The situation has been made worse by a litany of policy inconsistencies and the absence of a clear policy trajectory.
ZimAsset is dead in the water. The two million jobs that were promised were not created.
The seven percent growth rate that was targeted by ZimAsset was not achieved.
The $7 billion that was supposed to be mobilised under ZimAsset did not materialise. The country is now mired in fiscal crisis characterised by a cumulative budget deficit of $1,6 billion as at December 2016.
The economy is not growing hence public revenues have dwindled to $3,5 billion per year compared to public expenditure of $4,8 billion.
The cash squeeze has forced government to issue Treasury Bills in excess of $2 billion a move that has partially affected market conditions and exacerbated the liquidity crisis. Eighty-three percent of the total budget is chewed up by employment costs.
This has negatively impacted infrastructure development and social services delivery.
People are dying like flies in our public hospitals due to lack of drugs and equipment. So, really, Chinamasa inherited a structural strait jacket.
The summit of his failure is of course the incapacity of government to meet its obligations, like salaries and wages for instance.
But it is naive to blame Chinamasa as an individual. It is the whole Zanu-PF government that has failed. Chinamasa as the head of treasury is the natural target of public criticism but he does not run that ministry.
His recommendations on fiscal prudence have been overridden.
But to the extent that he has not seen it fit to resign, I would say that his culpability is very high. One of the grave mistakes he made was to commit Zimbabwe to repay $1,8bn arrears when he knew very well that the economy did not have the capacity to service the debt.
My own assessment is that under his watch, Zimbabwe's macroeconomic and fiscal conditions deteriorated so fast.
Q: Government has been told countless times to streamline its expenditure, however, deputy Labour minister Tapiwa Matangaidze recently promised an increment to teachers, do you think this is practical or he is politicking?
A: The question of streamlining government expenditure is almost like a taboo in Zanu-PF. Political expediency overrides economic rationale. So the deputy minister of Labour is exposing his infantile mentality.
It is wishful thinking to promise an increase in teachers' salaries when government cannot pay civil servants salaries and bonuses. It does not require a rocket scientist to see that the government was shut down long back. The economy is on auto pilot.
Q: There have been calls to adopt the rand as the primary currency, with Mugabe even supporting the idea. Do you think the rand can save Zimbabwe from the current cash woes?
A: Joining the South African Rand Union would ameliorate Zimbabwe's cash crisis but who would want to be exposed to the Zimbabwean contagion?
Zimbabwe's largest trading partner is South Africa and it would make a good business case to adopt the rand but the mechanisms are not that easy. For starters one of the preconditions is that Zimbabwe must have its own domestic currency. And at this juncture conditions are not yet ripe for the reintroduction of our own currency.
The country has to ratchet up its production and exports in order to close the trade balance. The country has to rebuild its own foreign currency reserves in order to back up our own currency.
Until all these fundamentals are achieved, it's not possible either to adopt the rand or reintroduce our domestic currency.
Q: Manufacturing firms have been having problems making international payments, with market figures showing a billion transactions waiting in queues. What can be done to solve this problem?
A: Companies have been put in a Catch-22 situation due to the introduction of bond notes as they cannot use bond notes to make foreign payments.
Because of the shortage of foreign currency, companies have to join the RBZ forex rationing window.
Under the circumstances, the Nostro account is struggling and half the time it is near empty. The problem will persist until a permanent solution to the cash shortages and liquidity crisis is found.
Q: Since IMF and World Bank Spring meetings ended, what do you expect from RBZ governor John Mangudya and Chinamasa?
A: The IMF/ World Bank springs meetings have come and gone and for me they have not been eventful. As long as Zimbabwe does not get debt relief and fresh loans, the situation will even get worse.
The good news is that the IMF has revised upwards the growth forecast to two percent although it is still too low to make any impact.
Q: Some companies in Zimbabwe have been importing power for their own use. What's your comment on the electrcity situation?
A: There is nothing wrong in companies importing their own power. But government must give those companies fiscal incentives in order to bridge their balance sheets.
Q: If MDC is elected into power in 2018, what are you going to do to solve the economic and social problems?
A: The MDC has a credible transformation agenda for Zimbabwe. Our economic vision is the creation of a $100 billion economy within the first 100 days on the back of investment renewal and confidence that will result in the review of the indigenisation policy.
An MDC government will right size the government, act on corruption and tap on Diaspora resources in order to strengthen the budget. Obviously ghost workers will go the morning after the swearing-in of …Tsvangirai at State House.
Production will be our buzzword and obviously, using our international goodwill, the MDC will go out to float infrastructure Eurobonds bonds in deep capital markets.
We will get syndicated off-shore loans on the strength of our economic stimulus measures.
An MDC government will make primary and secondary education absolutely free and introduce loans and grants at tertiary education level. We will bring back the land market by giving bankable title to all productive farmers.
We will compensate commercial farmers in terms of the Constitution and restore the country's bread basket status. The conditions of service of our defence forces will be improved and their equipment upgraded.
An authentic civil service audit will be done and once the correct levels of establishment are rationalised, we will pay competitive salaries to our civil service.
We will revamp our roads, railways and energy plants. Parastatals will either be commercialised or recapitalised through private equity or venture capital.
Rural areas will be transformed through our industrialisation and modernisation programme. But most importantly we will implement devolution.
All revenues will go to the Consolidated Revenue Fund and fundraising roadblocks will be suspended forthwith.
Our industrialisation programme will start with the resuscitation of closed companies like the Ziscosteel.
We will create jobs from our infrastructure and industrialisation plan. All this is possible if we can change governance culture.
Q: Do you think Finance minister Patrick Chinamasa has done enough to solve the country's economic problems and the current cash shortages?
A: Since 2013 the economy has plunged into a prolonged deflation because of low confidence levels. The situation has been made worse by a litany of policy inconsistencies and the absence of a clear policy trajectory.
ZimAsset is dead in the water. The two million jobs that were promised were not created.
The seven percent growth rate that was targeted by ZimAsset was not achieved.
The $7 billion that was supposed to be mobilised under ZimAsset did not materialise. The country is now mired in fiscal crisis characterised by a cumulative budget deficit of $1,6 billion as at December 2016.
The economy is not growing hence public revenues have dwindled to $3,5 billion per year compared to public expenditure of $4,8 billion.
The cash squeeze has forced government to issue Treasury Bills in excess of $2 billion a move that has partially affected market conditions and exacerbated the liquidity crisis. Eighty-three percent of the total budget is chewed up by employment costs.
This has negatively impacted infrastructure development and social services delivery.
People are dying like flies in our public hospitals due to lack of drugs and equipment. So, really, Chinamasa inherited a structural strait jacket.
The summit of his failure is of course the incapacity of government to meet its obligations, like salaries and wages for instance.
But it is naive to blame Chinamasa as an individual. It is the whole Zanu-PF government that has failed. Chinamasa as the head of treasury is the natural target of public criticism but he does not run that ministry.
His recommendations on fiscal prudence have been overridden.
But to the extent that he has not seen it fit to resign, I would say that his culpability is very high. One of the grave mistakes he made was to commit Zimbabwe to repay $1,8bn arrears when he knew very well that the economy did not have the capacity to service the debt.
My own assessment is that under his watch, Zimbabwe's macroeconomic and fiscal conditions deteriorated so fast.
Q: Government has been told countless times to streamline its expenditure, however, deputy Labour minister Tapiwa Matangaidze recently promised an increment to teachers, do you think this is practical or he is politicking?
A: The question of streamlining government expenditure is almost like a taboo in Zanu-PF. Political expediency overrides economic rationale. So the deputy minister of Labour is exposing his infantile mentality.
It is wishful thinking to promise an increase in teachers' salaries when government cannot pay civil servants salaries and bonuses. It does not require a rocket scientist to see that the government was shut down long back. The economy is on auto pilot.
Q: There have been calls to adopt the rand as the primary currency, with Mugabe even supporting the idea. Do you think the rand can save Zimbabwe from the current cash woes?
A: Joining the South African Rand Union would ameliorate Zimbabwe's cash crisis but who would want to be exposed to the Zimbabwean contagion?
Zimbabwe's largest trading partner is South Africa and it would make a good business case to adopt the rand but the mechanisms are not that easy. For starters one of the preconditions is that Zimbabwe must have its own domestic currency. And at this juncture conditions are not yet ripe for the reintroduction of our own currency.
The country has to ratchet up its production and exports in order to close the trade balance. The country has to rebuild its own foreign currency reserves in order to back up our own currency.
Q: Manufacturing firms have been having problems making international payments, with market figures showing a billion transactions waiting in queues. What can be done to solve this problem?
A: Companies have been put in a Catch-22 situation due to the introduction of bond notes as they cannot use bond notes to make foreign payments.
Because of the shortage of foreign currency, companies have to join the RBZ forex rationing window.
Under the circumstances, the Nostro account is struggling and half the time it is near empty. The problem will persist until a permanent solution to the cash shortages and liquidity crisis is found.
Q: Since IMF and World Bank Spring meetings ended, what do you expect from RBZ governor John Mangudya and Chinamasa?
A: The IMF/ World Bank springs meetings have come and gone and for me they have not been eventful. As long as Zimbabwe does not get debt relief and fresh loans, the situation will even get worse.
The good news is that the IMF has revised upwards the growth forecast to two percent although it is still too low to make any impact.
Q: Some companies in Zimbabwe have been importing power for their own use. What's your comment on the electrcity situation?
A: There is nothing wrong in companies importing their own power. But government must give those companies fiscal incentives in order to bridge their balance sheets.
Q: If MDC is elected into power in 2018, what are you going to do to solve the economic and social problems?
A: The MDC has a credible transformation agenda for Zimbabwe. Our economic vision is the creation of a $100 billion economy within the first 100 days on the back of investment renewal and confidence that will result in the review of the indigenisation policy.
An MDC government will right size the government, act on corruption and tap on Diaspora resources in order to strengthen the budget. Obviously ghost workers will go the morning after the swearing-in of …Tsvangirai at State House.
Production will be our buzzword and obviously, using our international goodwill, the MDC will go out to float infrastructure Eurobonds bonds in deep capital markets.
We will get syndicated off-shore loans on the strength of our economic stimulus measures.
An MDC government will make primary and secondary education absolutely free and introduce loans and grants at tertiary education level. We will bring back the land market by giving bankable title to all productive farmers.
We will compensate commercial farmers in terms of the Constitution and restore the country's bread basket status. The conditions of service of our defence forces will be improved and their equipment upgraded.
An authentic civil service audit will be done and once the correct levels of establishment are rationalised, we will pay competitive salaries to our civil service.
We will revamp our roads, railways and energy plants. Parastatals will either be commercialised or recapitalised through private equity or venture capital.
Rural areas will be transformed through our industrialisation and modernisation programme. But most importantly we will implement devolution.
All revenues will go to the Consolidated Revenue Fund and fundraising roadblocks will be suspended forthwith.
Our industrialisation programme will start with the resuscitation of closed companies like the Ziscosteel.
We will create jobs from our infrastructure and industrialisation plan. All this is possible if we can change governance culture.
Source - dailynews
