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2015 National Budget is nothing but hot air

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The 2015 National Budget presented late November is another clear indication that Zanu PF government continues to run the country in a toxic and retrogressive manner.

Chinamasa

Elton Mangoma

Sadly, for the people of Zimbabwe, this has resulted in long suffering coupled with massive job losses, an unprecedented number of school dropouts and an increase in death rate.

The budget, presented by Finance minister Patrick Chinamasa, clearly demonstrates that Zanu PF remains clueless in taking any corrective measures to resuscitate the economy.

There is no progressive action that has been included in the National Budget and while Zanu PF calls this policy consistency, it is in fact the true opposite and they are giving the wrong medicine at the expense of the people’s lives.

The 2015 National Budget is flat and uninspiring, with no ingredient to inspire any form of investor confidence that the country is desperately in need of.

Revenue collection continues to decline, while the economy is shrinking and is way behind the revenue that was collected in 2013 and the depressed situation is definitely set to continue in 2015.

There is nothing on the horizon that points to improving government revenue and instead, all signs are indicating to a total collapse of the economy, clearly indicating that Zanu PF’s ZimAsset programme is nothing but hot air.

The government expenses are out of control and the country had a National Budget deficit of $386 million as of October last year.
This spiralling debt was unheard of during the inclusive government era.

As a result, the Zanu PF government has resorted to huge borrowings in order to meet the salary requirements of the civil servants, while the mooted retrenchments of the public servants announced recently by Chinamasa should be focused on streamlining the government ministries and not the ordinary workers.

The borrowing to cover the budget deficit by the government results in the overcrowding of the productive private sector.

To cover this budget deficit, government now has an overdraft of $46 million with the CBZ Bank, issued Treasury Bills of $264 million, not paid input suppliers $45 million and raided $34 million in statutory reserves from the Reserve Bank of Zimbabwe.

This is a very dangerous and unsustainable move to take which will cause the economy to contract at a much faster rate.

This has resulted in the financial sector facing instability, while input suppliers have seen the government being the chief architect of company closures and failures, especially affecting the already vulnerable small and medium enterprises (SMEs).

Government’s borrowings are crowding out the private sector and creating a vicious circle, which if it continues to go unchecked, will lead to the total collapse of the economy, job losses and more suffering among the people.

In the 2015 National Budget, the allocation on social services is insignificant, especially at a time when the health delivery system is deteriorating, leading to unnecessary deaths.

What with a funeral parlour receiving the Best Business of the Year award?

The education vote is a mockery. Less than 2% was availed with the Presidential scholarship fund getting $6 million and the cadetship scheme getting a paltry $1 million.

The pittance will result in the rate of school dropouts rising.
It is only logical that the Presidential scholarship fund be abolished as it is partisan and also most of the degrees undertaken outside Zimbabwe are readily available locally.

What is currently allocated to the Presidential scholarships should be used to augment the support given to students at local institutions.

It is also regrettable that in the budget, to cater for the disabled, only $200 000 was allocated for the whole year, which is less than $20 000 per month for the whole community.

Because of bad economic management, a huge debt has been accumulated by the Zanu PF government over the years and the ruling party should admit that it has failed and it should apply for debt forgiveness and allow the country to start afresh, have access to new loans and spend more on social services delivery.

However, there is also need for a debt audit to ensure that there are no odious debts included.

There is also need for the government to have legitimacy and bridge the credibility gap of Zanu PF in order to attract the foreign direct investment (FDI) that the country is in desperate need of.
There is need to repeal the current Indigenisation and Empowerment Act.

Corruption in government ministries should not be formalised. Government should ensure that all line ministries operate within set guidelines.

The country needs policy changes to encourage public-private partnerships and Build Operate and Transfer concessions.
This policy will enable most infrastructure projects to be undertaken without the need to resort to further borrowings.

It does not make sense to increase the minimum capital of banks. This forces all banks to be large banks. Large banks will have serious negative effects as they are less accessible to SMEs.

The key is to have small banks with appropriate capital adequacy ratios. The world economic decline experienced was caused by the failure of large banks not small banks.

Zanu PF has also clearly shown that it does not like the new Constitution as only three out of 400 legal instruments have been realigned to the country’s new Charter. This is also an indication that Zanu PF has no capacity to fix the economy.

On agriculture, the presidential inputs scheme, which receives $252,3 million, remains highly compromised as it is partisan and discriminatory, yet the money comes from the National Budget.
All assistance to farmers should be done through the Ministry of Agriculture and financial institutions.

At the same time, the household food security programme should be complimented with the national food security (NFS).
The NFS requires access to between 300 000 and 400 000 hectares of land for maize growing.

Access to fund the NFS should be available at commercial rates and more importantly, there is need for the capacity to purchase and pay for the produce.

This necessitates operationalisation of the commodity exchange.
It is unfair for farmers that after supplying their maize to the Grain Marketing Board (GMB), the parastatal is failing to pay them and hindering them from planting again.

GMB currently owes farmers $47 million and the latter have become destitute.

The GMB is not also refunding or reporting on money raised when it sells the maize and other produce financed by the government.
The funds from GMB are being siphoned to fund Zanu PF activities like what has been reported as happening with Zesa.

There is need for an inquiry into the operations of GMB, Zesa and all other parastatals. Government intends to tax the beneficiaries of the land reform programme in order to pay compensation.

A1 farmers should be exempted from paying this land tax. A1 farms have been improvised due to lack of support from the government.
What is critical is for all land beneficiaries to have security of tenure so that they have peace of mind and also have access to resources to fund their operations.

The credit facility that the government is securing from Brazil to bring in farming implements such as disc ploughs, disc harrows and fertiliser spreaders, is destroying jobs in this country.
There is adequate capacity to manufacture such items including the informal sectors in places like at Magaba and Siyaso in Mbare, Harare.
The country can, therefore, only move forward if there is the establishment of a National Transitional Technical Council (NTTC) whose mandate is to work on increasing FDI and economic growth.

The NTTC will comprise competent apolitical technocrats.

There will be a need to implement all necessary political reforms that will ensure that the next elections the country holds are free, fair, credible and uncontested.

The people of Zimbabwe are in need of better economic prospects and the only way to achieve this is if we concentrate on reviving our economy and correcting our politics.

Mangoma is the MDC Renewal Team treasurer-general

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