13 November 2012

Zimbabwe: 2013 National Budget - Biti's Mission Impossible

As Finance Minister Tendai Biti readies to face an expectant nation when he delivers the 2013 National Budget on Thursday, all signs are pointing to economic stagnation and nothing short of a miracle will salvage the economy. The Confederation of Zimbabwe Industries has already sounded danger warning signs when last Wednesday it revealed that capacity utilisation in industry, which had been on a recovery path since 2009, has this year slid to 44,9 percent from 57,2 percent in 2011.

Economic growth projections for 2012 have two times been revised downwards from the initial figure of 9,4 percent, to 5,6 percent and yet to 4 percent.

The revision has been a clear signal that all was not well on the road to recovery and drastic action is required to jump-start the economic revival process once again.

One economic observer once described the Zimbabwean economy as a dirty child which had been playing with mud.

"You cannot choose to wash the child's head, arms or feet alone and leave the rest of the body unwashed," he said.

The quote points to the paradox of Zimbabwe's complicated situation where all sectors of the economy clamouring for financial support while Minister Biti is carrying a relatively empty briefcase.

From Government ministries, the agriculture sector, manufacturing, mining, infrastructure, women, youths, old people to the financial sector, everyone is anticipating a rescue package of some sort.

The civil service which is struggling with the increasing cost of living while salaries have not been adjusted this past financial year, is not only anticipating a review but is also looking forward to the 13th cheque as the year comes to an end.

Minister Biti has the unenviable task of having little or no option to prioritise one sector ahead of the other as every sector is critical in efforts to take the economy out of the hole in which it is now lodged.

It is virtually impossible for the Finance Minister to try and come up with measures that do not promote all inclusive growth in all sectors of Zimbabwe's economy.

The bottom line is that Minister Biti, who presents probably his last budget statement as Finance Minister ahead of general elections set for next March, is expected to come up with miraculous measures that will once again stimulate growth and productivity while trying to balance competing demands.

Already indications show that financial demands by various Government departments for the forthcoming Budget will be in the region of US$20 billion, which is almost a 600 percent increase from the 2012 Budget.

With little revenue trickling into Government coffers, and sanctions imposed on the country and especially on diamond producing companies choking their revenue making potential, his flexibility is therefore highly constrained.

It is left to the Finance Minister to make as much noise as possible for removal of the embargo placed on diamond mining companies and the economy as a whole, to provide a lifeline for the economy.

Mobilising external funding, which has been scarce during the lifespan of the coalition Government also becomes a necessary undertaking in light of the economy's constrained revenue generating potential.

Multilateral financiers as well as other donors must, prior to presentation of this Budget, have been approached to avail whatever little funding they can in support of the minister's economic rejuvenation efforts.

Failure to restart this economy will not only lead to a decline of the socio-economic situation in the country, but will present a headache to the Government which takes charge after the "Ides of March".

It is also crucial that the 2013 national budget be not short sighted but outlives the next general elections regardless of which party carries the poll.

As it stands, Minister Biti is in a tight spot, and it is this budget which has to bring out the ingenuity that Zimbabweans are revered for, if the economy is to once again bring hope of a better life for the ordinary man in the street who is struggling to make ends meet.

The 2013 National Budget has to breathe life into the economy in a manner which allows every man and woman on the street to feel its impact in their lives.

New Ziana

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