Finance minister Tendai Biti’s 2012 Budget has all the ingredients of growing the economy if all government arms co-operate and live within their means to ensure expenditure does not exceed available resources.
The budget should also ensure small to medium scale businesses are supported to create employment for the benefit of the majority of the country’s school leavers and graduates.
Not long ago it was reported that graduates from the country’s universities now spend up to four years without formal employment because the economy is not growing.
But now the projected growth of the economy by an estimated 9,4% next year is a welcome move, especially following a decade of decline, compared to an estimated 9,3% this year.
It is pertinent to note the performance was underpinned by expansion in the finance, mining, tourism, agriculture, manufacturing and transport sectors, according to Biti.
While the Budget is pro-poor, Biti faces the daunting task of finding more ways for government to earn money while taming its profligate spending.
Given the current political landscape and with elections touted for next year or in 2013, carrying out the desired fiscal reforms will be tough.
Zimbabwe will need to monetise the GPA.
With the robust growth momentum, the economic outlook remains buoyant.
However, the downside risks mar the optimism. Rising government spending is Biti’s predominant worry, the recent unbudgeted civil servants’ salary increase has increased government’s employment costs from 51% of the 2011 $2,7 billion Budget to 61%.
Instead of increasing expenditure on social services, Biti says government officials have blown over $40 million on foreign travel so far.
Will Biti have powers to rein in this penchant for travel, including that of President Robert Mugabe, which is exerting huge pressure on the fiscus?
Against this backdrop, the government’s commitment to bring down the fiscal deficit is now impossible, and Biti projects that by year-end Zimbabwe will have a deficit of $700 million.
One would hope that the Budget was not populist because Biti knew the time of reckoning was getting closer with elections pending.
He plans to electrify 3 500 rural schools as well as drill a borehole for each. It is an open secret that President Mugabe, Prime Minister Morgan Tsvangirai and the other political parties are planning for elections any time soon hence Biti could have tried to lay the ground for campaigning.
What is dangerous is if Biti fails to honour the pledges made in his Budget, the reasons being the uncertain global economic recovery, scant capital inflows, unemployment, and slow industrial growth, among others.
On the one hand, government spending would remain high on account of subsidies and various social sector schemes and on the other, it would not have the comfort of the revenue windfall being pumped in by Bretton Woods institutions into other African economies.
One would believe though that Biti’s 2012 budget is underpinned on reality and praticability.
Zimbabweans must live within their means.