Zimbabwe: Budget Must Support Economic Growth - Czi

Senior Business Reporter

FINANCE Minister Mthuli Ncube's 2021 Mid-term Budget should carry measures that continue to support growth and prevailing stability, chief among them access to foreign currency, electricity and infrastructure, industry says.

The Confederation of Zimbabwe Industries (CZI) president Henry Ruzvidzo said this in an interview ahead of Minister Ncube's presentation of the 2021 National Budget review to Parliament tomorrow afternoon.

He said CZI, the country's largest industrial lobby group, had noted positive growth numbers from the majority of sectors in Zimbabwe, which pointed to good prospects for the economy.

Minister Ncube projected in November last year the economy would grow by 7,4 percent this year, after a straight two-year downturn, largely driven by agriculture and mining, while inflation was forecast to end the year at 9 percent.

Economists are also in agreement with assessments made by the International Monetary Fund (IMF) and the World Bank, which predicted growth of 6 percent and 3,9 percent respectively.

Zimbabwe's economy is forecast to grow, despite the long shadow of the Covid-19 pandemic, driven by a stellar agricultural season, commodity price boom on global markets, construction and electricity sectors.

"We expect the budget (review) to support the growth by continuing to ensure foreign currency availability, adequate electricity and other supporting infrastructure," Mr Ruzvidzo said.

He said production required adequate working capital and a conducive business environment. Mr Ruzvidzo said it was therefore critical that monetary and fiscal discipline be sustained to maintain macro-economic stability.

"Currency reform continues to be carefully calibrated whilst addressing market distortion. We expect all subsidies will be fully provided for in the budget with some consideration for stimulating the hardest hit sectors by Covid-19," he said.

The CZI president said efforts by the Government to establish external lines of credit, following decades of hurtful illegal western embargo, must continue to sustain the growth momentum.

Analysts said they expected policy measures to cushion the economy and citizens from the pummelling of the third wave of Covid-19 and expect to prominently feature in Minister Ncube's budget review.

Economist Professor Gift Mugano said amid the surge in Covid-19 cases which saw Zimbabwe relapsing in a relaxed mode of Level Four Lockdown, the Minister should announce a supplementary budget to double efforts at containing the pandemic.

Prof Mugano said when the Minister first presented the 2021 budget; he expected threats from the respiratory disease to be much less than the rampage by the virus under the third wave.

Further, Prof Mugano said apart from measures to stymie an ungoverned spread of the Covid-19 pandemic, Minister Ncube should also prescribe fiscal measures to support, cushion or bail out industry and commerce.

Another economist, Persistence Gwanyanya said Minister Ncube should pronounce fiscal incentives that could include tax cuts, tax holidays and duty exemptions on key imports like agricultural equipment and capital goods.

Mr Gwanyanya said there was a need to come up with policy interventions to foster a structural shift that brings permanent solutions to challenges facing the economy while ensuring better yields, increased productivity and stronger value chains.

Minister Ncube last year presented a $421 billion National Budget Statement, premised on the assumption that the cumulative revenue collections for the 12 months to December 2021 would total $390,8 billion. Overall, he predicted a 2021 National Budget balance of minus $30,8 billion while the current account was expected to close the current financial year at $73,8 billion.

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