FINANCE minister Patrick Chinamasa will today present the 2017 National Budget amid the deteriorating economic environment.
Comment: NewsDay Editor
According to the Zimbabwe Congress of Trade Unions (ZCTU), more than 260 companies have closed shop this year, throwing thousands onto the streets.
Those that had remained are owed months’ salaries equating to wage theft, according to a report by the Labour and Economic Development Research Institute of Zimbabwe and The Solidarity Centre.
“Wage theft affects an estimated 22 000-plus workers for urban councils (local government entities), 12 000 in agriculture and more than 7 500 each in the security sector, automotive industry and railways,” the report, Working Without Pay: Wage Theft in Zimbabwe, said.
The few remaining companies are struggling and have failed to meet their tax obligations. This affects revenue inflows to Treasury.
According to the third quarter report by the Zimbabwe Revenue Authority, the tax agency was owed $2,65 billion at the end of the third quarter ended September 30.
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At the beginning of the third quarter, the debt was $2,63bn.
The budget presentation comes at a time the government has failed to cut its expenditure, with wages accounting for 97% of the revenue in the six months ended June.
This has resulted in the wage bill crowding out allocations to social and capital projects.
In the first half of the year, the government incurred a budget deficit of $623 million amid fears the gap would widen to $1bn by year-end.
The government has been financing the deficit through borrowing from the domestic market. Such a grim situation should have jolted any government into action, but it seems they are bereft of ideas, preferring populism to pragmatism, as long as it ensures the ruling party retains its power in the event of an election.
Such populism has seen the government failing to deal with the elephant in the room — runaway expenditure.
Its sincerity was questioned in September when it overturned Chinamasa’s bold reforms to cut salaries and suspend bonuses for civil servants.
As such, the civil servants now see the 13th cheque as an inalienable right. The private sector stopped paying bonuses some years back.
It’s not only the rising expenditure that Chinamasa has to contend with.
The debt overhang is a threat to the country’s ability to attract cheap lines of credit required to reboot the economy.
The government is struggling to adhere to the arrears clearance strategy in which it would pay preferred creditors — the International Monetary Fund (IMF), World Bank and African Development Bank — a combined $1,8 billion.
The government had initially set a June 30 deadline. The deadline was moved to September 30 and eventually into the New Year. To its credit, it has paid back IMF.
Chinamasa should do himself good by setting realistic growth targets in line with the obtaining environment.
Already, Treasury has been throwing around a growth rate of 4,8% in 2017, according to its National Budget strategy paper, a feat analysts say is unattainable.
It’s good to dream, but in a number of instances, one should dream within their means.
Failure to do so, means that one has been consumed by populism — Zanu PF’s bedrock when confronted with challenges. Chinamasa has two options to choose from: pragmatism and populism. Over to you, minister Chinamasa.