16 November 2012

Zimbabwe: Biti Presents Paltry U.S.$3,8 Billion Budget

FINANCE Minister Tendai Biti yesterday presented a paltry US$3,8 billion "developmental budget", describing it as the most difficult to construct in the short life of the inclusive government.

Biti's budget is smaller than South Africa's retail chain supermarket group, Pick n Pay whose average annual turnover is R55,3 billion (US$6,1 billion).

However, he said numerous downside risks, including potential political instability, threatened his budget.

Biti said the multitude of challenges facing the economy required a fundamental re-think of the state, economics and development in Zimbabwe.

"In this regard, the 2013 national budget seeks to offer leadership and direction on the bold structural measures that must be taken to unleash Zimbabwe's growth potential in pursuit of the MTP's vision of constructing a modern democratic developmental state," said Biti.

The Finance minister proposed a 15-point roadmap which would in the short-term seek to reverse the current slow-down and refocus the economy on a higher growth trajectory.

The plan is anchored on consolidating the gains of the last three years by guaranteeing a stable macro-economic environment, projected domestic inflation would remain low at 4,5% in 2013, up from 4% this year.

Biti revised GDP growth for 2012 to 4,4% from the 5,6% he set during his mid-term fiscal policy review in June after the initial 9,4% forecast.

The minister said he intended to deepen revenue measures at the same time expanding the revenue base. He will also tighten expenditure controls after it emerged government ministries had this year accumulated arrears of more than US$260 million.

Other elements of the plan included attraction of Foreign Direct Investment in partnership with local investors and promoting local industrial competitiveness to facilitate production for both domestic and export markets. This should lead to a reduction of the current account deficit.

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