Short of necromancy, or resolution of the issue on the need for transparent accounting of diamonds revenue by the Ministry of Mines (of the most obedient son), there’s very little fiscal maneuverability for Finance minister Tendai Biti, when he presents the much-awaited, much-delayed and much-postponed fiscal Budget for 2012.
The supersititious may feel exonerated in the myth that a leap year generally does not augur well for ambitious undertakings.
They only have to refer to 2008, as the annus horribilis for Zimbabwe’s economy, as it is in that last leap year that the death knell for Zimbabwe’s old economy — whose resurrection is the subject of today’s Budget — was dealt.
One of Zimbabwe’s foremost comedians, Edgar Langeveldt, had in that year staged an almost prophetic skit where he buried the Zimbabwean dollar with the attendant funeral dirge.
Yet the issue of reparations for those that suffered losses on the abolition of the Zimdollar remains one of the contentious issues business still wants resolved, judging from presentations made to Biti by key sectors of the economy.
Some may argue that this is an emotional rather than an economic issue, but with the spectre of elections looming possibly next year — or in yet in another myth-held 2013 — the economics of politics or politics of economics struggle is difficult to ignore, and this plays on both the emotions and economic needs of the electorate.
From a populist view, Biti needs to announce a rise in civil servants’ salaries, which issue he has managed to contain in the non-election years.
He also needs to announce further cuts in personal taxes to stimulate aggregate demand from the economic perspective and also win the hearts and minds of the populace on the political front.
The demands by business are obviously lower-cost capital and for industrialists, continued or increased protection from the unrelenting onslaught of competition from foreign products.
By increasing protectionism, he risks alienating the masses of cross-border traders and their dependants, whose only form of employment has paradoxically been the same imported products that wiped away their formal jobs in the first place.
The increased import duty as announced by Biti also has adverse effects on revenue collection by Zimra as more people resort to smuggling the goods across borders.
Income meant for the fiscus ends up in the pockets of the chain of syndicates involved in corrupt activities at borders. It’s the same old conundrum, lower duty and taxes and on paper you appear to have lower revenues; increase the duties and taxes and on paper you have higher revenues.
But on the ground you have less revenue as more start tax-dodging and smuggling. In terms of the more enabling environment for the economy, there’s still the issue of high electricity tariffs and other utility bills, which economically debilitate the operations of business while also biting on the political constituency.
Many such costs may not fall directly under his ambit, but require input from him and critically he must have input from those directly responsible.
Biti is aware — or must be aware — the nation is judging the potential performance of his party’s government should it come into power by his performance, although, of course, from emotional perspective the electorate is likely to give him the benefit of the doubt, given the environment of the fractious unity government within which he has been operating.
Perhaps if this was a one-man decision, he could easily go where the political mileage is. But this is no one-man decision, neither is it a one-party decision. It is possibly the reason why the issue of the 2012 Budget has been long-drawn.