Government adviser and economist Ashok Chakravarti has said the economy is not receding back to the hyperinflation era, as there are better policies in place than in 2008.
BY FIDELITY MHLANGA
“We are nowhere near 2007. We are nowhere near 2008. We are not heading towards hyperinflation, as some people are saying, that is not going to happen because we have much more better policies at the moment,” he said at the pre-budget seminar organised by Parliament on Friday.
This came after the September 22 panic buying as Zimbabweans feared the return of hyperinflation and shortages of basic commodities.
He said deficit finance was a problem affecting the economy as well as aggravating the shortage of foreign currency, calling for the taming of the ever-ballooning expenditure by the government.
Chakravarti said there was also the need to craft a vibrant informal sector policy that nurtures the sector and enable it to grow and contribute to national revenue at a later stage.
The Zimbabwe Revenue Authority recently registered for taxation 13 000 small to medium enterprises (SMEs) at a time there are least 2,8 million SMEs in the country.
According to Chakravarti, the tax to gross domestic product ratio of 22 to 24% was abhorrent to investment and among the highest in Africa
Another economist, Gift Mugano said the government should consider subsidising electricity to the industry as the 9,8c per KWH was the highest in the region, rendering local products uncompetitive due to high cost of production.
He called for the removal of red tape which militates against export competitiveness in the country.
“In Mauritius to export you need one document, but in Zimbabwe you need at least 10 documents. Some of the requirements need to be streamlined. In Zimbabwe you spend three days to put in place exporting documents, but in Botswana you need just eight hours,” he said.
Mugano said the country’s pharmaceutical sector can be better than tobacco in generating foreign currency, urging foreign aid organisations, such as the United States Agency for International Development (USAid), to inject money into local drug manufacturing organisations and produce pharmaceuticals locally.
“Direct Aid is competing with us. Let USAid and [World Health Organisation] WHO put their money into CAPS and other companies and produce pharmaceuticals locally,” he said.
Mugano said there were 22 tax heads in the tourism sector, adding that there should be a single window payment platform to reduce corruption and increase compliance as was the case in Kenya.