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Mthuli Ncube's budget dilemma

25 Nov 2023 at 07:59hrs | Views
DON'T tell me what you value, show me your budget and I'll tell you what you value:" Joe Biden.

Ordinarily, Finance minister Mthuli Ncube should have presented the ZWL$47,8 trillion 2024 national budget on Thursday this week.

This budget is small compared to our needs and may be pared down to meet the International Monetary Fund (IMF) conditions under the Staff Monitored Programme (SMP). Zimbabwe is in a fix and there seems to be no way out for our Treasury.

The Treasury is busy trying to allocate resources from what is available. Ministries, departments, and agencies funded from the fiscus had requested of a combined ZWL$110 trillion. While these figures look huge, they are a miniscule compared to the country's needs if you consider that they are not in US dollars. The official exchange rate is nearly hitting ZWL$6 000 to the dollar on the formal exchange market. No one knows how much it will be by the time the budget is approved and implemented.

Zimbabweans should not lose focus that even at ZWL$47,8 trillion, this budget will have a deficit of ZWL$3,6 trillion that will be funded by debt. There lies the big problem for a country with a debt overhang of US$17,2 billion (2022 September figures) and could possibly be north of US$20 billion considering new debts, penalties on arrears and deficits that are funded by debt.

The situation in the country has not been made any better by the turmoil in the main opposition. The country's focus is on by-elections instead of the 2024 national budget. Citizens are not aware of the alternative budget proposals from the opposition. Granted, the budget is a technical area but there should have been some broad discussion on social safety nets, capital expenditure and taxation.

Government officials have been talking a lot about the 2024 budget being pro-poor. What does this mean? It simply means resources are being put to the greater benefit of the majority. These could include public health, education, energy, transport, social housing and social safety nets, among other things.

A cursory look at the budget talk and budget strategy paper showed something different. Finance deputy minister Kudakwashe Mnangagwa at the Insurance Institute of Zimbabwe annual conference this month said: "So, I would say it is a pro-people, pro-production and a pro-business budget."

That is economic hogwash. One cannot be pro-everything at the same time. They are pro-business in line with President Emmerson Mnangagwa mantra — Zimbabwe is open for business.

It is not far to see where this is coming from. It is coming direct from Washington. Mnangagwa is trying hard to please the Bretton Woods Institutions.

The IMF team that came to Zimbabwe last month at the conclusion of its mission said: "There is an urgent need to accelerate the FX [forex] market reform, by allowing more flexibility in the official exchange rate through a more transparent and market-driven price discovery; removing the restrictions on the exchange rate at which banks, authorised dealers, and businesses can transact; and further minimising export surrender requirements."

The multilateral lender was not done yet. It added: "Sustainable development will also require a resolution of debt overhang. The Fund continues to provide policy advice and extensive technical assistance in the areas of revenue mobilisation, expenditure control, financial supervision, debt management, economic governance, and macroeconomic statistics."

There are some euphemisms in the above quote which most people miss their meanings. These are revenue mobilisation, expenditure control, debt management and economic governance.

Let's try to break them down. Revenue mobilisation is a code for collecting every tax due or in even increasing taxes. I don't see this being pro-poor. Expenditure control means the government should cut down on expenditure, it should be thriftier. Debt management means the country should take less debt and repay what it owes. And economic governance means things like stopping money laundering, smuggling and corruption.

Your guess is as good as mine. Economic governance and debt management will not be attended to. The Auditor-General audit reports year-in -year-out have exposed how much money was lost in government ministries, departments, and agencies. And we have noticed how indifferent the State was to the Gold Mafia investigative documentary.

It is interesting that before the announcement of the bad news in the 2024 budget, the government through state-controlled media released a story that said Zimbabwe's GDP was now US$66 billion. The story said they capture the informal sector that is usually left out in such surveys. To boot, they reeled out Eddie Cross to corroborate the numbers. It is clear from experience that Cross' numbers are generally quack and done to advance a certain narrative.

It is important to quote the IMF projections on economic growth in detail here: "Growth is expected to slow to 3,5 percent in 2024 due to weaker global demand for minerals and a weather-related slowdown in agriculture. As external conditions worsen, the economic outlook will even more crucially depend on progress toward macroeconomic stabilisation and transformational structural reforms."

This bleak outlook should jolt our government into some action. However, the Mnangagwa administration will resort to its ostrich mentality — burying its head in the sand. This is where the opposition, civic society and public intellectuals should play instrumental roles in keeping the government accountable.

As such, it can be argued that the delay in tabling the budget in Parliament is deliberately designed to make sure the National Assembly has limited time to debate this crucial policy document. It is without doubt that the budget will pass with perfunctory debate and the usual economic analysts will be paraded on national television to defend it.

Ncube knows very well that he cannot please the IMF, business and the poor in the same budget statement. That is his dilemma. However, it is a fact that capital will win this round again as Mnangagwa and Ncube have long nailed their colours to the mast that they are neoliberals, pro-capital and pro-privatisation. No wonder why the Zimbabwe Investment and Development Agency and the Mutapa Investment Fund have been put under the President's ambit.

Paidamoyo Muzulu is a journalist based in Harare. He writes here in his personal capacity.

Source - newsday
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