PARLIAMENT has to exercise its oversight role to curb unnecessary expenditure in ministries and parastatals, as this has been fuelling the widening of the fiscal deficit, a top government adviser has said.
BY VENERANDA LANGA
Treasury is projecting a budget deficit of $1,7 billion in 2017. The deficit will narrow to $672 million this year.
Top government adviser, Ashok Chakravarti, told legislators during a post-budget seminar at a Harare hotel on Monday that it was impossible for the ministry of Finance alone to monitor 22 ministries and 114 parastatals, urging Parliament to exercise its oversight role.
“We have 114 parastatals whose total dead capital is $15 billion and this contributes nothing to national development and the national budget, and we cannot expect the Ministry of Finance to monitor 22 ministries, and so Parliament must monitor them,” he said.
Chakravarti said the high government expenditure was unhealthy as the incurred budget deficit is being financed through issuance of Treasury Bills which is akin to money printing.
“Electronic money is no different from printing $100 notes. As a result of excessive electronic money, we are now facing double-digit inflation and severe shortages of foreign currency,” he said.
Parastatals have been underperforming due to years of government interference and entities being home for “jobs for the boys”.
In his 2018 National Budget, Finance and Economic Development minister Patrick Chinamasa outlined a strategy to reform the public enterprise, which remains a draw back through their inefficiencies, with their contribution to the economy down from around 60% to current levels of about 2%.
He said government would shut down technically insolvent parastatals which are not strategic.
“Last year’s financial audits indicate that 38 out of 93 public enterprises incurred a combined $270 million loss, as a result of weak corporate governance practices and ineffective control mechanisms. In addition, 70% of these entities are technically insolvent, representing an actual or potential drain on the fiscus. Further, fiscal risks also arise from debts assumption, re-capitalisation requirements and called-up guarantees,” Chinamasa said last month.
Chakravarti said the high budget deficit and government expenditure were the country’s biggest structural problems resulting in inflation.