VICTORIA FALLS — Finance minister Tendai Biti has revealed that the current economic growth rate figures will be further revised downwards in the forthcoming 2013 National Budget.
Report by Nqobile Bhebhe
During the Mid-Term Budget Review in July, Biti revised the growth forecast to 5,6% from the initial projection of 9,4%.
The revision is in line with the International Monetary Fund (IMF) projections, that the country’s economy would grow only 4% as a result of inadequate revenue inflows.
IMF has said despite the growth in productive sectors such as mining and agriculture, the economy continues to experience funding challenges that have resulted in the government failing to sustain critical economic requirements.
“Indications on the ground point to the need to further revise the July growth projections that we revised as we move from projections to actualisation,” said Biti last Friday.
“That will be clarified when I present the Budget on November 15.”
He said his ministry was in the process of coming up with draft budget proposals and warned legislators that the 2013 Budget risked focusing on politics at the expense of fundamental economic issues.
“This Budget can be populist and unfocused as it is an election budget. So it is critical that we apply our minds fully when crafting the Budget,” said Biti.
He said his ministry was “afraid of elections that would be violent” as that would have a negative impact on the economy.
The demands for the Budget, according to Biti, were high when compared to the available resources.
Meanwhile, Biti said companies that were folding were not only facing liquidity challenges, but operational policies were also weighing down businesses.
“De-industrialisation is not solely based on availability of resources, but policy issues that are in place.
“Businesspeople are being chased after by the Zimbabwe Revenue Authority for taxes, Environment Management Authority, local government, liquor licence authorities all demanding something,” said Biti, adding that Bulawayo was the most affected.
He said labour arbitrators were also awarding high claims when companies collapsed or struggled to operate.
Parliamentary Portfolio Committee on Budget, Finance and Investment Promotion chairperson Paddy Zhanda, however, said lack of finance could not be solely blamed for company closures.
“We cannot conclude that lack of money is forcing company closures. We must look at policy structures that are in place,” he said.
Last year, about 85 companies in Bulawayo closed shop because of viability problems.
Capacity utilisation in the manufacturing sector has stagnated at 57,2% owing to liquidity constraints as most companies are failing to access long-term lines of credit to recapitalise.