Presentation of Mid-Term Fiscal Policy Statement to Parliament a non-event

The presentation of the Mid-Term Fiscal Policy Statement to Parliament by Finance minister Tendai Biti was in my view a non-event.

I say so because we cannot applaud a reduction in the Budget at a time when social services delivery is in a perilous state. I also say it was a non-event because Members of Parliament have not demonstrated seriousness when it comes to critically analysing the various proposals and measures and engaging in more informed debate.

There is a tendency to focus on the symptoms of the problem and not address fundamental issues stifling economic growth and revenue inflows into the fiscus.

Biti has revised expenditure projections for 2012 to $3,6 billion from $4 billion. The major reason for the significant reduction is poor revenue inflows, mainly from diamonds which he says only managed to bring in $146 million during the first half of the year. It had been projected that revenue inflows from diamonds would reach $600 million during 2012.

It is important to clarify that Biti is not saying that diamond revenues are not being generated, but that the companies mining in the Marange fields are not remitting to Treasury what they are supposed to remit. Therein lies the problem.

These firms are simply violating the law and must be held to account for this offence. This is the fundamental problem that our MPs should be debating and propose practical measures to collect revenue that has not been remitted.

Zimra should audit books of these companies and garnish their accounts for non-remittance of what is due to the State.

Biti talked about a new Diamond Act as part of addressing the problem. We have heard about this many times, but the Bill is nowhere to be seen. I understand that there is disagreement between ministries of Mines and Finance on the content of this piece of legislation, which will further delay its introduction in Parliament. It is therefore possible that this Parliament will be dissolved for the elections before the Bill is brought to the House.

In any case, this law can be disregarded as has happened with many good pieces of legislation that are not being enforced, including the Constitution, our supreme law. Related to this is the proposal by the minister to amend the relevant legislation in order to provide for the physical presence of Zimra personnel at mining locations. The minister says this will facilitate monitoring of diamond processes such as extraction, receipting, evaluation, grading, polishing, auctioning and processing of export customs documents.

While this is welcome, let us hope the amendments are speedily enacted and that these Zimra officials stationed at diamond mining companies will not be corrupted.
There is need to look at the underlying or root causes of poor economic performance and revenue inflows. One of the root causes is our political situation. This inclusive government has become extremely dysfunctional, with ministries and government departments pulling in different directions.

There appears to be lack of decisive leadership in order to bring sanity to the work of the inclusive government. The truth of the matter is that policy incoherence and the continued bickering between the parties to the Global Political Agreement has harmed business and investor confidence. For example, an international financial institution will not extend lines of credit to Barclays Zimbabwe if the perception is that Barclays will be expropriated under the indigenisation laws.

What this means is that Barclays Zimbabwe will not have sufficient capital to on-lend to the productive sector, including agriculture, at favourable terms. So blaming Biti for not adequately funding agriculture is mere political rhetoric.

So what I am saying is that we need to deal with the inconsistencies in our policies before we implement this and that tax measure hoping to promote investment. What we are doing is simply tinkering with the problem or dealing with the symptoms of our economic challenges. We are trying to fire-fight without any measurable success.

The investing community, both local and foreign, would like to be assured that there is proper governance in Zimbabwe. The moment the perception is that property rights will not be protected, potential investment will remain on the sidelines.

I hear some analysts lambasting minister Biti for freezing wages and salaries for civil servants.

Surely there is nothing that Biti can do when the wage bill reaches 73% of the total Budget from the originally projected 57%. This is simply unsustainable. An example of policy incoherence is a situation whereby various ministries employ more people in violation of Treasury instructions. What should be done first is to deal with the large number of ghost workers in some ministries who are chewing a big chunk of the wage bill.

Parliament must insist on the implementation of the findings and recommendations of the civil service audit. Thereafter, we can then begin to talk about improved salaries for our very important civil servants.

Judging by the Mid-Term Fiscal Policy Statement from Biti, Zimbabweans should brace up for a prolonged period of economic stagnation and suffering.

The sooner we begin to attack the real causes of our problems, including the crisis of governance, the better the chances of reviving our economic fortunes. Tinkering with the problems is a waste of time and effort. The 2013 National Budget will be presented to Parliament later on this year with Biti outlining the same challenges that he has highlighted since the formation of the inclusive government four years ago.

.John Makamure is the executive director of the Southern African Parliamentary Support Trust writing in his personal capacity. Feedback:

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