FINANCE MINISTER Tendai Biti says he will today announce a demand-driven national budget that will quicken economic growth at a time when the country’s key economic sectors — agriculture and manufacturing — continue to decline.
Report by Bernard Mpofu Chief Business Reporter
Biti told NewsDay yesterday that Treasury had carried out wide consultations across the country to craft a national Budget widely expected to stimulate economic growth. He, however, warned that the success of new measures expected to be announced in the fiscal plan hinged on the political will of leaders of the inclusive government formed in 2009.
Already, the government has cut economic growth projections to 4% from 5,6% due to the underperformance of diamond revenue and the dire state of agriculture.
The minister is on record announcing that revenues have stagnated, a development that has taken Treasury to regional peers seeking budgetary support.
With no long term finance from multilateral lenders, it has become apparent that State coffers cannot be relied on to resuscitate the country’s infrastructure.
“The budget will provide leadership for this economy,” Biti said.
“It will identify problems and define plans for such problems.
“The ball is now in the court of implementers and politicians for it to succeed. We, as Treasury, have defined a clear roadmap to move this economy. The budget will be demand-driven.
“We have carried out 333 consultative meetings across the country and received 220 written submissions. It’s a budget that will meet demands of this economy.”
Analysts warn that Biti’s dilemma would be striking a balance between populist pro-poor measures characterised by low taxes on individuals and taking heed of the International Monetary Fund (IMF) prescription on austerity measures.
The minister is already facing pressure from Zanu PF politicians who accuse him of failing to “fully support” agriculture in a capital-starved economy. Industrialists on the other hand, are clamouring for a stimulus package after capacity utilisation for the manufacturing sector this year plunged to 44,2% from 57,2% year-on-year.
But fiscal space is already constrained due to a huge debt now representing 118% of the gross domestic product and a cash budgeting system.
The Southern African Parliamentary Support Trust, in a pre-budget statement, however, said not much was expected from the budget given the country’s “fundamental constraints to growth.”
“Skewed priorities are evident elsewhere.
“Agriculture has traditionally been the mainstay of the economy — providing livelihoods for over 75% of the population, and sustaining industry with raw materials and demand for services and goods,” reads the statement in part.
Yet, despite the decline of this sector, we continue to see a greater proportion of expenditure spent on defence.
“However, even if the budget were to realign spending priorities, it would not be enough to ensure sustainable growth.”