LOCAL economist Gift Mugano yesterday challenged government to stop abduction and persecution of human rights defenders and opposition activists, saying the two vices were scaring away potential investors.
BY VENERANDA LANGA
Mugano, who is Africa Economic Development executive director, told Parliament during a pre-budget seminar held in Harare yesterday that government needed to urgently address its negative perception.
He said Zimbabwe was facing a multi-faceted economic crisis triggered by a huge export bill averaging US$12,5 billion every year because the country was not producing, but importing goods that should be manufactured locally.
“The second problem is the country perception, centred on corruption and abductions —whether they are genuine or not — it is a negative perception and government must deal with those arrests of activists and whether they are justified or not, they must be resolved because the best way is to minimise those issues,” Mugano said.
He quashed Finance minister Mthuli Ncube’s claims that there was a budget surplus, saying the US$75 COVID-19 allowances for civil servants were not catered for in the budget, including the $18 billion industrial stimulus package which is 29% of the 2020 budget of $63 billion.
“There was no provision in the 2020 budget for adjustment of civil servants’ salaries and yet they have gone up by 300% and that is massive,” Mugano said.
“You do not want to be a prophet in order to know that there is a budget deficit. There are subsidies for fuel, electricity and Zupco, which is a very big business and the International Monetary Fund was very clear that government is running a huge budget deficit.”
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He also said that it would make sense if the 2021 national budget was announced in United States dollars as the current currency inconsistencies were not working since the economy had dollarised.
Government adviser and economist Ashok Chakravarti said dollarisation had not been successful in any developing country, adding that the US dollar notes circulating in the country were less than US$1 billion.
“It was a fake creation. At the turn of 2020, we had about US$10 billion which was created fictitiously. It was a Ponzi scheme and none of those US$ were real,” he said. “We said government should move in the direction to say that, these are local currency and deal with the monetary policy issues.”
Chakravarti said the interbank auction exchange system had brought a degree of stability on prices and the exchange rate. Speaker of the National Assembly Jacob Mudenda said the world economy was expected to contract by 44%, except China whose economy would grow by 4,9% despite COVID-19.
He said Zimbabwe had the potential to emulate China, which rose to become the world’s biggest economy within 45 years.
Trade finance specialist Persistent Gwanyanya said the country’s unsustainable debt levels caused currency instability and high poverty levels, where two-thirds of the Zimbabwean population was poor and 75% of rural population was living in poverty.
