columnBy Eric Bloch
FOR nearly two months, many in Zimbabwe have awaited with much concern the presentation by Finance minister Patrick Chinamasa of government's 2014 mid-year Budget Review.
Traditionally, the minister submits to parliament (and hence to the population) his budgetary proposals and intents for the ensuing calendar year, usually in November of each year. However, in addition, in late June or July, the minister normally provides parliamentarians a detailed review of the state's fiscal performance for the first half-year.
Concurrently, he would table such fiscal policy changes as he perceives necessary for the remainder of the country's fiscal year.
The population's mid-year budgetary concerns have been no less in 2014 than in previous years. The economy has enjoyed a marginal upturn in contrast to the recurrent declines in preceding years, but the extent of the upturn has been far below that needed to alleviate government's bankruptcy, and relatively insignificant as against the magnitude of revival needed to address the widespread poverty that prevails in Zimbabwe.
Moreover, Zimbabwe's economy continues to be grossly insufficient to fund the extensive needs for infrastructural maintenance, rehabilitation, and development.
With almost all of the population vested with such legitimate concerns, a mid-year Budget review was anticipated, with pronounced hope and expectation that government would convincingly disclose the actions being taken to address the concerns.
The Minister of Finance's decision not to present a Mid-Year Budget review has driven most of the population to assume that, on the one hand government has failed to comply with its 2014 Budget in the first half-year or, on the other hand, has been unable to determine acceptable and effective remedial actions to be pursued in order to address the state's fiscal crises.
The over-riding thought of most Zimbabweans was that government may, at last, have recognised that fiscal policies could be a major trigger for a progressive economic upturn, notwithstanding that various other economic recovery triggers would also be necessary if a comprehensive recovery, and subsequent growth, are to be achieved.
The key issues which Zimbabwe's economically-oppressed businesses, their employees and most of the population anticipated could be addressed in the review include:
A summation of government's income and expenditure during the first half-year, and the extent that the fiscus has been able to fulfill its declared intents to curb governmental spending, containing such spending within the bounds of the period's fiscal inflows. By so doing, government will not have had to resort to yet further borrowings, which will have further swelled up Zimbabwe's huge national debt.
In like context, the populace expected Chinamasa to provide credible and convincing details of the foreshadowed state income and expenditure during the second-half of 2014, and of the extent of fiscal revenues as are expected to exceed expenditures (if government's declared intents that Zimbabwe cease to expend more than its revenues were genuine and credible).
Measures to stimulate economic recovery, with concomitant significant increases in the numbers gainfully employed, progressively diminishing the massive extent of unemployment that currently results in the vast majority of the populace being grievously impoverished.
Amongst these measures needs to be the introduction of meaningful export incentives, as was previously provided by government. Those incentives are key to manufacturers in Zimbabwe being able to be competitive in export markets, with products manufactured in other countries who accord their manufacturers immense export incentives.
The reintroduction of substantive export incentives would be highly stimulating to the economy in general, and creative of increased employment in particular.
The consequential economic growth would enhance fiscal inflows which would enable the state to fund the incentives without prejudice to its resources.
Review of Zimbabwean import duties and allied charges, to provide that imports of manufacturing inputs should be free of such charges, whilst imports of goods in competition with locally manufactured should be subjected to duties to an extent that would result in equal selling prices of the locally manufactured products with the imported, resulting in consumers' product selection being founded upon product quality, and upon domestic loyalty.
Introduction of meaningful investment incentives, stimulatory of both domestic and foreign investment. Such incentives could include prescribed periods of "start-up" tax holdings, wherein there would be no liability to income tax on projects attained during such prescribed periods. Other incentives could include waivers of liability to Value Added Tax (VAT) on initial imports, and concessional import duty rates.
Tax incentives to employers who increase the numbers of Zimbabweans employed by them, on a continuing basis, coupled with incentives by way of enhanced deductibility of costs sustained in training employees.
Support for the tourism sector, enabling hotels, lodges, tour operators, and other providers of services to tourists to be internationally price competitive, concurrently with enhancement of facilities and services.
- Programmes for the total, or partial, privatisation of parastatals, thereby relieving government of the funding burdens of requisite capital and development expenditures, and concomitant debt, whilst facilitating improved service delivery to commerce and industry, and to the population at large.
- Positive actions to curb pronounced levels of corruption in most of the corridors of government which impacts upon the state's resources, and upon government's operational costs. Concurrently, such corruption also has severe inflationary repercussions, for those effecting corruption seek to recover the costs thereof in their selling prices and service charges.
The needs for fiscal and economic policy development enhancement are great, for the country's economy cannot be permitted to continue in its frail and fragile state, grievously jeopardising the wellbeing of most of the population. Those needs have to be addressed by government as a whole, but the fiscal considerations and impacts are so great as to be key to the pursuit of those needs. Hence government should be expeditiously demonstrating positive policies and actions, which in part could have been effectively done in a mid-year Budget review.