16 November 2012

Zimbabwe: Biti Predicts Slowed Economic Growth and Warns Against Violence

The country's 2013 national budget was presented to parliamentarians on Thursday, with Finance Minister Tendai Biti predicting slower economic growth due to political tensions ahead of elections next year.

Biti said uncertainty over elections has scared off potential foreign investors.

He said: "The biggest risk to this economy in 2013 remains that of a violent, contested State election."

The biggest winners were civil servants, whose salaries were allocated more than half of the $3.8 billion set aside for government spending. Civil servants will see their salaries going up by 5.5% in January. The government workers have been earning wages under the poverty datum line, conducting on and off strike actions for years.

Biti also allocated just over $750 million to the education sector. The amount is 27 percent of the national budget.

Economic analyst John Robertson explained that the key change from 2012 to 2013 is that the Finance Minister has more modest expectations of growth this year. The country has had to revise its level of spending, after realising much less in tax revenue than expected.

Robertson said people will have to pay more for cigarettes and liquor after the Finance Minister increased excise duty on these two products in his budget. But changes in the banking sector will make people happy.

"The Minister of finance is insisting that banks from now on offer reasonable rates of interest on any bank balances that stay in place for any useful period of time. If you have $1,000 or more in the bank you will now automatically earn 4% on that balance," Robertson explained.

He added that no bank charges will be levied on deposits of up to $800.

Banks will also be required to ease procedures and regulations for opening new bank accounts, so that more people can open accounts and be issued debit cards. According to Robertson, this is an attempt to resolve the problem of cash shortages in the banks.

The MDC-T issued a statement saying they endorse the 2013 National Budget and support the Finance Minister's calls for free and peaceful elections in 2013.

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