Industry commends Chinamasa

CAPTAINS of industry and economic analysts have commended Finance Minister Patrick Chinamasa's boldness in tackling the country's economic challenges and called for speedy implementation of the proposed measures.

In separate interviews yesterday, they said Thursday's 2016 mid-term fiscal policy statement was "realistic" and should be buttressed by a strong implementation matrix to achieve tangible results in the short to medium term.

In a string of policy measures Minister Chinamasa proposed to, among others, shelve civil servants bonuses for the next two years and reduce the public wage bill by cutting 25,000 jobs by December 2017.

This is expected to save $155 million annually while the bonus freeze would save $180 million and cut expenditure on salaries, which gobbled about 97 percent of government income creating a constrained fiscal space.

The measures also include rationalisation of embassy personnel as well as allowances for top government officials and those of public state enterprises.

The measures are expected to reduce employment costs to around 60 percent of total revenues by 2019 and ultimately redirect revenue towards capital expenditure.

Financing the agriculture sector, a key economic pillar, and revitalising the manufacturing, mining and tourism sectors as well as creating value chain linkages and improved social protection, form the bedrock of the minister's policy statement.

"The Government needs to walk the talk in the mid-term policy review," Confederation of Zimbabwe Industries (CZI) president Mr Busisa Moyo said.

He said Minister Chinamasa was frank in providing statistical evidence on the economy's performance, which is characterised by low productivity.

Mr Moyo said downsizing on the Government's expenditure was welcome as little was going into Treasury due to lack of production in the industries.

"Government departments should start accepting the rand. We were expecting the Minister to point out this but he did not highlight it. We know we're operating under the multi currency system but no specific measures have been put to ensure the rand is accepted. The United States dollar is a reserve currency and it's killing businesses," said Mr Moyo.

He said the wide usage of the US$ was contributing to corruption as well as the externalisation of money.

Bulawayo-based economic analyst Mr Reginald Shoko said Minister Chinamasa succeeded in "addressing the problematic issues affecting our economy."

He concurred that huge public expenditure was a major factor behind economic stagnation.

"Taking measures to address this shows sincerity on the part of the Government. The Minister noted the need to revive productive sectors and companies like Hwange Colliery, which is crucial for this region," said Mr Shoko.

"The Minister also talked about debt overhang in public entities like Zesa, which is owed over $1 billion. He emphasised the need for people to pay but forgot to tell ministers and top officials to pay also.

"Indeed the Minister touched on the need to clear external debt to attract fresh lines of credit but we also expect him to clear the domestic debt, which is affecting growth of indigenous businesses."

Another economist Mr Morris Mpala said:

"Let the redundant civil servants go and the Government can start with those due for retirement and clear ghost workers. Government should do serious audits and commercialise most of its entities by weaning them off Treasury.

"The Government is right on the bonus issue and going forward we need to adopt a performance based approach. We also support proposals on ease of doing business and facilitate consistency in policy implementation."

Prominent farmer Mr Basil Nyabadza hailed Minister Chinamasa for coming up with a realistic policy review at a time when the country's economy was on its knees.

He said the agricultural sector, which is facing productivity challenges, has received adequate attention in the policy statement.

"The agricultural sector welcomes the acknowledgement on the need to focus on production in our key crops food chain maize, wheat and sugar beans. We're keen to see the position that will be taken in the full budget for 2017 for the agricultural sector. Agriculture needs more allocation towards research. Research is critical especially in this period as climate change is real," said Mr Nyabadza.

Minister Chinamasa revised downwards the 2016 economic growth projection to 1,2 percent against the targeted 2,7 percent at the close of 2016 on the back of "strong headwinds" that continue to weigh down on progress.

He cited depressed international commodity prices, particularly for minerals, limited domestic and foreign direct investment, also associated with our debt overhang, the growing fiscal deficit, which impacts on the liquidity of the financial system, as well as on business activity and the resultant overall fall in incomes and weakening of domestic aggregate demand as major barriers.

The Government had proposed a national budget of $4 billion for 2016, premised on anticipated revenues of $3.85 billion, and a projected domestic financing gap of $150 million.

Minister Chinamasa said during the period January to June 2016, revenue under-performance against over-expenditures resulted in a cumulative budget deficit of about $623.2 million, far above the full-year target of $150 million.

The Minister said failure to contain the budget deficit in the shortest possible time will worsen the deficit to an estimated year-end level of over $1 billion.