Opinion / Columnist
Zimbabwe mid-term budget; on a wing and a prayer
22 Aug 2011 at 18:15hrs | Views
JOHANNESBURG - Can someone out there tell me how a whole minister of finance can plan and project how the economy will perform when he is not even sure of how much revenue the country is earning from its most strategic minerals? According to the most recent Zimbabwe mid-term, only $103.9m of an expected amount of more than $2bn was realised by the government from mineral resources. In addition 65% of expenditure is expected to fund civil service salaries with the balance of $1.1bn being made available for productive use. Travel is expected to cost $30m more than education while the issue of 75 000 ghost workers still needs to be sorted out.
On the banking side, Zimbabwe banks claim to have distributed US$2.6bn in the first six months of this year, the distribution sector received the lion's share of credit of around 40%.The agriculture sector accounted for 21, 2%, manufacturing 19, 8%, transport and communication 4, 6%, construction 2, 1% and others 6, 6%.
Now based on this expenditure pattern I do not know where the projected 9.3% economic growth for 2011 is going to come from. The minister projects mining and agriculture to drive economic growth (nothing new here) but this is highly dependent on international commodity prices and the weather.
Did you hear this one: The Reserve Bank of Zimbabwe (RBZ) has called upon the government to come up with an agricultural master plan encompassing the entire production value chain in order to increase productivity on farms. The central bank said there was need to adopt a holistic programme to avoid the current "piecemeal approach". So says the same person who was directly involved in the piecemeal approach of funding agriculture projects.
In my opinion Zimbabwe has no economic direction at all and the expenditure priorities are clearly non-growth oriented and yet members of the government of national unity (GNU) expect the country's economy to grow significantly going forward. I would say that the major problem is the politics where expenditure is politically driven while the revenue collection capacity of the country is dismal due to state failure and the general backwardness of ICT.
Zimbabwe is not generating adequate revenue to meet its needs especially to grow the manufacturing sector and the little it does generate is spent on salaries, travel and recurrent expenditures while the major export earnings of $2bn are driven by sectors fraught with uncertainties. An interesting factor is that there is a similar pattern in the private sector where huge salary expenditures are clearly out of kilter with the need to grow the economic base.
The country has been held at ransom by ZANU (PF) and any economic estimations or projections are to me mere thumb sucks that give a temporary illusion that the country is going forward. It will not until ZANU (PF) goes.
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Vince Musewe is an economist. Write to him: vtmusewe@gmail.com
On the banking side, Zimbabwe banks claim to have distributed US$2.6bn in the first six months of this year, the distribution sector received the lion's share of credit of around 40%.The agriculture sector accounted for 21, 2%, manufacturing 19, 8%, transport and communication 4, 6%, construction 2, 1% and others 6, 6%.
Now based on this expenditure pattern I do not know where the projected 9.3% economic growth for 2011 is going to come from. The minister projects mining and agriculture to drive economic growth (nothing new here) but this is highly dependent on international commodity prices and the weather.
Did you hear this one: The Reserve Bank of Zimbabwe (RBZ) has called upon the government to come up with an agricultural master plan encompassing the entire production value chain in order to increase productivity on farms. The central bank said there was need to adopt a holistic programme to avoid the current "piecemeal approach". So says the same person who was directly involved in the piecemeal approach of funding agriculture projects.
In my opinion Zimbabwe has no economic direction at all and the expenditure priorities are clearly non-growth oriented and yet members of the government of national unity (GNU) expect the country's economy to grow significantly going forward. I would say that the major problem is the politics where expenditure is politically driven while the revenue collection capacity of the country is dismal due to state failure and the general backwardness of ICT.
Zimbabwe is not generating adequate revenue to meet its needs especially to grow the manufacturing sector and the little it does generate is spent on salaries, travel and recurrent expenditures while the major export earnings of $2bn are driven by sectors fraught with uncertainties. An interesting factor is that there is a similar pattern in the private sector where huge salary expenditures are clearly out of kilter with the need to grow the economic base.
The country has been held at ransom by ZANU (PF) and any economic estimations or projections are to me mere thumb sucks that give a temporary illusion that the country is going forward. It will not until ZANU (PF) goes.
------------
Vince Musewe is an economist. Write to him: vtmusewe@gmail.com
Source - Vince Musewe
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