30 November 2007

Zimbabwe: 2008 Budget - Economic Fiction

THE mediocre budget proposals for 2008 presented yesterday by Finance Minister Samuel Mumbengegwi is an economic fiction that reflects the disconnection, denial and the sense of abstraction of the Zanu PF regime.

At all material times over the years, we have always argued that the regime is trapped in a matrix of denial and has no depth of the nature and extent of the Zimbabwean crisis.

The suggestion by the totally talentless Mumbengegwi that the Zimbabwean economy will grow by 4% in 2008 and that year-end inflation in the same year will be down to 1 978% underpins the psychiatric disconnect.

The structural streak of abstraction and disreality makes Mumbengegwi fail to acknowledge the reality of the zillion dollar budget, preferring instead to pronounce it in terms of multiple trillions.

That this regime could present a $7, 840 quadrillion budget and fail to see and acknowledge the reality that it has failed, is not in charge of this economy and has no answers to this malaise is further evidence of this reality deficit and the reified case of structural denial.

Zimbabwe is in a structural crisis and is in its 11th year of continuous negative economic growth rates, a situation not known in a country not in war.

The macro-economic fundamentals, in particular the inflation figures, the exchange rates and the interest rates betray total and complete lack of appreciation of the same by this regime.

Put simply, the economy is on a free-fall and attempts to rein in the same by whatever instrument, be it the budget itself or the RBZ's quasi-fiscal fascism, merely reinforces a fiction; the fiction that Zanu PF is in control when it is not in control.

At the core of the crisis in Zimbabwe is the fact that the state is controlled by a coterie of gangsters and thugs who are tired and exhausted.

The limitations of nationalism are being exposed in the post-colonial State where the nationalists controlling the State have failed to reform and to pass on the baton.

Put simply, in the language of Franz Fanon, nationalism has become exhausted and is surely dying.

Further, to the extent that nationalism and the state it controls have failed to evolve, the said State has become predatory and captive. It is a state that has become an arena for personal accumulation. It is a state with vampire, vulture and piranha tendencies.

It eats everything in its way. It steals for the sake of stealing and accumulates for the sake of accumulation.

However, it is a State that is fiercely loyal to one value and one value alone; the power retention matrix.

Thus, even in its state of disconnect, Mumbengegwi's budget does a brilliant job for the power retention agenda, particularly given that 2008 is an election year.

No wonder, in real terms, 70% of the budget is devoted to the army, the police, militias and patronage in the form of high allocation to the women and the youth.

Thus, under a vote item innocuously headed Special Services in the vote for the President and Cabinet, $87, 9 trillion has been allocated to the Central Intelligence Organisation.

The Ministry of Defence got a staggering $374,3 trillion while the ministry of Home Affairs got $339,6 trillion.

But the real slush fund is found hidden as an unallocated reserve under the Ministry of Finance's allocation in the form of a staggering $277,9 trillion.

Further, a large part of the patronage funds are found hidden in various vote allocations to the Ministry of Public Service, Labour and Social Welfare.

The attempt to label this budget a "people's budget" is as hollow as it is unoriginal. For all practical purposes, this budget is arguably the most anti-people budget since independence. We say so for a number of reasons, both structural and normative.

At a structural level, the government anticipates a revenue of $6,08 quadrillion and an expenditure of $7,8 quadrillion, leaving a deficit of 11%.

In its wisdom, or lack of it, the government anticipates receiving revenue to the sum of $6,08 quadrillion. This is fiction given the continuing shrinkage of the supply side of our economy.

Indeed, the Minister of Finance himself in the same statement, implicitly acknowledges that for 2007, actual revenue collections were 53 % of the fiscal targets of $46, 6 trillion.

What this means is that in 2008, there is no reason to expect that revenue collection will be anything more than 60 percent of the revenue target of $6,08 quadrillion.

This government will certainly print and borrow more money.

That will trigger off major inflationary pressures arising out of the increase in broad money supply (M3) and of course the inflationary effect of the budget deficit.

More inflation means further theft on the people's savings and incomes.

The budget is also anti-people in that it is premised on a false and scary turnaround matrix. The government of Zimbabwe has dubbed 2008 the "mother of all agricultural seasons".

Pursuant to this, it has invested zillions of dollars in this agricultural season. About $1,9 trillion has been allocated towards inputs and over $1,4 trillion has been allocated for the purchase of fertiliser, chemicals and seed channeled through the inappropriately named Operation Maguta. Over and above this, there has been an extensive farm mechanisation programme which has been financed to the tune of US$25 million.

Two things arise. The first is that with a fertilizer deficit of over 50%, a seed maize deficit of over 40%, a bumper harvest is a pipe dream.

Never mind the fact that everything depends on whether or not we have a good rainy season.

More important is the fact that an accumulation model based on agriculture and mining is a false one. In this century, to believe that agriculture and mining can offer a way out of supply side haemorrhage is totally ahistorical.

Even if we were wrong on this point, the fact remains that a good agricultural season does not translate into economic salvation as long as there is no clearly articulated ideological and developmental framework and as long as there is no respect to economic fundamentals , even in the narrow and neo-liberal sense.

Put simply, any budget has to be grounded on a clear ideological policy and vision. Past budgets have been rooted in various developmental models that were in existence eg. Zimprest, the Millennium Economic Recovery Plan or the National Economic Development Priority Programme.

The fallacy of Mumbengegwi's budget is that it's a rhetorical, contradictory mass of populist and neo-liberal matrices which are not loyal to any basic stabilisation or development model.

Moreover, there is a complete disconnect and dysfunctionality in the affairs of this regime.

On one hand there is an overzealous RBZ governor who at least is loyal to a vague notion of economic stability and on the other, there is a coterie of gangsters who impose indiscriminate price controls and fight inflation by imprisoning captains of industry and business leaders.

The risk-taking gangsters will push in totally predatory and archaic legislation such as the Empowerment Bill and the new mining laws.

The bottom line therefore is that the country is operating on the basis of a structural deficit model.

The neo-colonial State, such as Zimbabwe, operates overdrawn accounts in respect of economic sense, economic decency and truly pro-people agenda.

The only way to close this structural deficit is to resolve the burning political deficit in the country.

This requires genuine national dialogue that will hopefully articulate the parenthesis of a new people-driven Constitution model and free and fair elections in terms of that model.

Quite clearly, the regime in Harare continues to play blind man's buff with the economy and the people of Zimbabwe.

Tendai Biti, MP is the MDC Secretary-General.

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