14 July 2010

Zimbabwe: Biti Presents Mid-Term Fiscal Review

Harare — FINANCE Minister Tendai Biti will today present his 2010 Mid-Term fiscal policy statement at a time when the economy is facing downward pressures such as surging inflation, an unsustainable civil service wage bill and deteriorating balance sheet among other economic challenges.

But for the first time, Minister Biti hinted he will not propose a supplementary budget, saying the future now hinges on the sale of diamonds from Chiadzwa.

The Budget review comes a day after President Mugabe opened the Third Session of the Seventh Parliament of Zimbabwe in which he also pointed out that revenue from Chiadzwa diamonds would immensely contribute towards the turnaround of the economy.

President Mugabe said a growth momentum of 5,4 percent would be maintained this year, 2,4 percent slower than Minister Biti's initial growth forecasts. Biti had projected economy would expand by 7 percent this year.

The 2010 National Budget anticipated revenue of US$1,4 billion and US$810 million from international donors.

"We will remain within the US$2,2 billion expenditure framework. Given the deficit and already existing lack of expenditure, we should have been going for a supplementary budget but we are not going to that," said Minister Biti early this week.

He said he had put too much faith in donor support but that "falls far below the US$810 million we had anticipated."

Minister Biti is expected to build on the existing economic stabilisation that the country is currently enjoying due to the adoption of the multi-currency system at the beginning of last year

Economic liberalisation directly contributed to the immediate containment of inflation by arresting rapid price movements and putting an end to rapid money supply growth as well as curtailing speculative activities.

Some analysts have said more emphasis should now be placed on reducing sovereign risk through working towards more stabilisation of the political environment to harness international resources to augment domestic ones.

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