12 November 2012

Zimbabwe: Biti Lays the Facts in Budget

press release

The 2013 Budget will seek to deal with reduction of rural poverty and fund projects that have to do with service delivery, improve education, health, water and electricity, Finance Minister, Hon. Tendai Biti has said.

Hon. Biti said the country's financial situation is very tight as there is no fiscal space which is met with the challenges of high demand and high expectations. "We have key areas that this budget will tackle and these deal with the main issues that are affecting the country," Hon. Biti said this week.

"The budget will seek to address the issue of lines of credit, foreign direct investment and capital flows into this country which then helps to recapitalize most of the industries. Our budget for 2013 is reform oriented because we need to finish the reform agenda," he said.

Minister Biti will present his National 2013 Budget in Parliament on Thursday. He said that there was need for urgent reforms in all the parastatals and state enterprises, reforms in the procurement systems and the transformation of the public finance management systems.

The government, as a way of raising revenue and providing essential services to the general public has been running several state enterprises and parastatals like the Grain Marketing Board (GMB), Air Zimbabwe and ZUPCO among others. The companies instead of raising funds for government have created platforms for corruption and mismanagement by Zanu PF linked officials.

Air Zimbabwe has been grounded while the GMB has been used to distribute agricultural inputs and outputs on partisan basis while prejudicing millions of people.

"This budget is going to be a reform oriented budget because we need to finish the reform agenda. There is need for reforms in our parastatals and state enterprises, reforms in our national procurement systems and the reform of the public finance management systems," he said.

Since the inception of the inclusive government, the Ministry of Finance has been working on strengthening capacity building on public finance management within key departments as a way of enhancing accountability and increasing revenue base.

Capacity building in public finance management is critical in improving accountability in the administration of public resources. With Hon. Biti at the helm of the Finance Ministry, the government has to date made huge strides in improving public finance management evidenced by the enactment of the Public Finance Management Act in 2009 which is expected to strengthen good governance and accountability.

He said that the budget would further seek to address and consolidate the macro-economic stability and low rates of interest.

Interest-rate targets are a vital tool of monetary policy and are taken into account when dealing with variables like investment, inflation, and unemployment. "So our budget for next year will seek to consolidate the macro-economic stability and low rates of interest so that the people's lives improve," Hon. Biti said.

"Further, our budget will be pro- poor as it will seek to address the plight of rural women by making provisions of water, food and even electricity. It will further seek to protect the education system. Not all of us come from rich backgrounds and the government needs to cater for the need of everyone. Thus, this budget will consider education as an important factor," he said.

Hon. Biti said the 2013 budget will provide leadership in terms of the imperator of state building and nation building. "So the budget will cover issues to do with the referendum and the constitutional commissions that we are putting in place among other requirements for nation building," he said.

After the successful holding of the 2nd All Stakeholders' Conference in October, the nation now awaits the final document from Parliament before a national referendum is held to make the document the supreme law of the land.

Hon. Biti said thus the nation will "see a budget that will seek to implant hope to the people and belief in the Zimbabwe we all want".

He however, bemoaned the lack of accountability in the mining sector particularly on diamond revenues which continue on a downward trend. "We are in agreement that diamond money should work for Zimbabweans. As the Ministry of Finance our role of collection has been restated so we are going to be meeting stakeholders in the diamond mining sector in order to map a plan to ensure that what is being mined in Zimbabwe should benefit Zimbabweans more and should stay in Zimbabwe to develop the country," he said.

Hon. Biti said in 2010 when diamond mining started, Treasury received US$174 million, while in 2011 they received US$41 million and a further US$43 million so far. "So you will realise that since 2010 we have received about US$200 million as diamond revenue," he said.

"There is a huge gap between what we ought to have received and what we have actually received and I am pleased to say the law has been amended. We amended the law in July to make sure that the Zimbabwe Revenue Authority is involved in the entire value chain of diamonds. Cabinet, the Finance and the Mine ministries are in agreement that the Finance Ministry should be central to ensure that the country get what is due so that we are able to pay civil servants, farmers, miners, children, those with disabilities," he said.

Hon. Biti reflected on the four years in office as Minister of Finance and the various changes that have been realized as a result of the MDC factor in government.

"In 2009, we inherited an economy that stood at US$500 billion percent inflation; a country that had no positive growth rate in Gross Domestic Product (GDP) in over 14 years; closed down schools, universities, clinics and Hospitals. In fact, we only managed to collect revenue worth US$4 million in 2009."

"To have a functional economy as we have now, the Finance Ministry has made some changes, but it's not enough. We have been growing at an average rate of 7.7 percent, which is the fastest growing economy in the world but we need to sprint to make sure that our people have jobs and that there is value addition in our industries.

We need to make sure there is beneficiation in our industries; we need to make sure that there is industrialization in Zimbabwe; we need to liquidate the dual enclave economy. It pains me to know that half the population of Zimbabwe live in rural areas amidst abject poverty, so it is a developmental path and we need to finish this job so that Zimbabwe can be an African pride " he said.

At least 75 percent of local goods are still procured from outside of the country before being sold on domestic shelves. Companies without international ties, on the other hand, are struggling as a result of the trend, without a domestic manufacturing platform to lean back on.

Hon. Biti said industries need US$5 billion to recapitalise. Where we differ with industries is the assumption that government can do everything and this is not possible. The private sector must play its role; the Foreign Direct Investment should play its role. Government's main function is to create conducive conditions for wealth creation, for entrepreneurship and I think we have done that in the last few years. On our path we will try to create some lines of credit but the private sector and bank system must play their role," he said.

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