BY FIDELITY MHLANGA/MISHMA CHAKANYUKA
FINANCE minister Mthuli Ncube is today expected to deliver the mid-year fiscal policy at a time the country is battling economic headwinds, characterised by spiking inflation, lack of liquidity, disposable incomes and a crippling shortage of electricity which has seen households and industry go for up to 18 hours a day without power.
We spoke to captains of industry and analysts on what they expect from the minister. Below are excerpts:
“He must divulge if there is any financing facility or plan in the pipeline to deal with the power crisis. The minister is expected to talk about the budget’s positives. He has been talking about the surplus, but he has not talked about the overall surplus balance that looks at the entire debts. He must dissect the entire surplus to the nation after paying all debts.
“Another issue is he must clarify the currency framework. Statutory Instrument 142 must be clear. If it’s left like that, we are likely to end the year redollarising.” — Zimbabwe National Chamber of Commerce chief executive Christopher.
“In much respect, the big problem is that there is nothing much the minister can say. This time, factories are not working. There is no electricity; no liquidity in banks. The solution to power cuts is to finish building power stations and make sure they work. There is also need to build trust in Zimbabwe. We could solve the electricity shortages by borrowing money to build power stations, but the problem is we cannot repay.
“We need real leadership from government. We need re-engagement with the rest of the world. We still can’t borrow money for agriculture, the manufacturing sector and other productive sectors. Trust is not being established. Banks need to increase higher interest rates and at the moment, there is still very low. Depositors still don’t trust banks so they keep money within themselves”— Economist John Robertson.
“If you look at the cost of fuel in terms of those industries that produce basic commodities, it implies that most of our commodities now have to be imported. We are back to square one, with the result that indexing of pricing is still at the back of every pricing that we see in the shop. That is why you find that sugar yesterday increased from ZWL$10 to ZWL$15 to ZWL$17, Mazoe Orange Crush, which had also gone down, has increased. I think we are reaching what we might deem to be prize plateaus. The buying power of consumers has gone so down now that people will not be able to access basic commodities. So, it’s either the companies themselves will close down and there will be shortage in the shop, unless if something drastic comes to play.
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“The availability of cash is another issue; you find that if you go downtown, the rate at which the informal business has taken over is amazing and that people are even selling cash as a commodity. People are not accepting EcoCash or swipe. What they are merely accepting is cash, which in turn is used to buy foreign currency. So, in the midterm review, they have to re-look and check how they have actually progressed in terms of all those areas.” — Consumer Council of Zimbabwe chairperson Philip Bvumbe
“What we are expecting from the policy review is to first know what makes the supplementary budget. Government recently announced the 50% cushioning allowance and this has to be covered by the supplementary budget. The review has to show how government is going to deal with the legacy debt that is presenting a potential claim. They have to tell us how the money is going to be paid and where that money is going to come from. Treasury has to be realistic and the numbers that are to be presented need to be realistic, too.
“The recently introduced Statutory Instrument 142 came with a market determined rate and a new currency. This is going to affect the farmers as their money will be continuously eroded due to the changes on the interbank rate and since farming is a seasonal activity, farmers who once got their money between January and February might earn an already eroded sum. Treasury should come and close that gap. We also need to know how prepared they are to deal with the aforementioned issues. If not addressed, those things are going to lead to an extended expenditure and we need to be very careful about those issues if the local currency is going to be sustained. We are also expecting to know how realistic the policy to rewinding austerity is, given the potential risk,” — Financial expert Persistence Gwanyanya.
“I think he must reduce the tax burden through tax relief measures, for instance, the upward adjustment of the individual tax-free threshold from ZWL$350 per month”— Economist Prosper Chitambara
