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“In 2011, the economy will grow by 9.3 percent which is equivalent to US$8 billion,” Biti said as he presented the 2011 national budget before parliament.”With the continued improvement in agriculture and mining … we think we will be able to achieve the growth rate,” the minister said.

The budget also caters for a constitution referendum and elections next year.
Minister Biti set aside US$1,4 billion for civil service remuneration, almost twice the US$773 million allocated in this year’s budget.
Of this, US$1,1 billion will be devoted to the provision of remuneration for State workers while US$300 million will cover pensions, medical aid and social security contributions.

Conditions of service for members of the Judiciary and Legislature — which have traditionally been guided by negotiations encompassing civil service representatives — will be determined by provisions of the Judicial Services Act and Parliament’s Standing Rules and Orders Committee.

The minister announced a raft of marginal tax concessions.
He increased the tax-free threshold to US$225, up from US$175, while the tax-free bonus portion was raised to US$500 from US$400 as the nation gets into the festive mood.
The new thresholds will release a few extra dollars into taxpayers’ pockets.

The duty-free facility for imported basic commodities was extended to June next year.
On polls, Minister Biti told journalists that a budget had already been drawn up and the money would be released once President Mugabe made the necessary constitutional proclamation.

“In the event that we have a Presidential declaration, then we will definitely have an election.

“We have put some money aside for a referendum and elections,” he said.

The minister gave priority to macro-economic stability, and enhancing agriculture and food security, education as well as rehabilitation and construction of key infrastructure.
He allocated the highest vote of US$400 million to the Ministry of Education, Sport, Arts and Culture — the bulk of which will go to infrastructure development and procurement of learning materials.
The minister proposed a reduction of duty on motor vehicles exceeding 1 500cc from between 40 and 60 percent to 40 percent.

The valuation of imported second-hand vehicles will be reviewed and be based on a standard model.
Minister Biti also reduced duty on selected household goods, such as television sets and selected medical apparatus.
The reductions are effective January 1.

The minister proposed lowering customs duty on textiles, clothing and footwear — something cross-border traders are bound to welcome.
Increases in mineral taxes and royalties and import duties on cigarettes and imported spirits are expected to make up for the anticipated losses from Pay As You Earn and other tax concessions.
In another development that is set to compensate loss of revenue from these tax concessions, the minister proposed to use local authorities to collect presumptive tax from small businesses such as commuter omnibuses, hair salons, small-scale miners and cottage industries, among others.

Local authorities are expected to collect and check compliance by businesses whenever they renew operating licences.
The local authorities will retain 10 percent of collected revenue.
Minister Biti announced negotiations with the United States Federal Reserve to increase the number of coins in circulation to eliminate change shortages.

In terms of expenditure, the minister said at least 74 percent, or US$2 billion, will be allocated to recurrent expenditure with the balance going to capital costs.
Minister Biti said he had received total bids of US$11,3 billion of which US$7,5 billion had been earmarked for capital expenditure and the rest for recurrent costs.
He challenged various ministries and Government departments to concentrate on those priorities “that fit within our resource envelope”.

The economy is recovering from a low base that saw Gross Domestic Product dropping by 50 percent in the decade to 2008, mainly due to illegal Western sanctions on Zimbabwe.
Recovery of agriculture and mining had impacted positively on the economy, which is expected to register 8,1 percent growth this year.
It will accelerate 9,1 percent next year while inflation should average 4,5 percent.

Such figures have been achieved by huge economies like China and India over the past few years.
In Zimbabwe, economic stability was sustained largely through continued use of multiple currencies, fiscal prudence through cash budgeting and economic liberalisation measures.
Funding challenges and power shortages, however, continued to affect productive sectors.

Minister Biti said Government would continue to engage Botswana, South Africa and other development partners to help finance the economy.
A US$75 million financing package with Botswana has been sealed while discussions are at various stages with other possible financiers.
The African Export and Import Bank continued to be a critical partner in 2010.

Government and the bank launched the Zimbabwe Economic Trade Revival Facility under which companies are borrowing money at interest rates of libor+ 5 percent over a repayment period of between six months and three years. Libor refers to the London Interbank Offer Rate, which is the rate at which banks in London charge each other and is used as a global benchmark for loans.

Critical funding is required to improve industry’s production and to finance agriculture.
A few schemes are already in place to assist communal, A1 and A2 farmers while banks have introduced facilities to improve production.
Agriculture is expected to grow 34 percent this year, bouyed by maize, tobacco, sugar and cotton.

The firming of international prices for gold, nickel, platinum and copper among others could see 47 percent growth in mining.
Government anticipates significant contributions from diamond mining once issues like certification, geological surveys and quantification of deposits are addressed.
To date, Zimbabwe has conducted two diamond auctions with 2,7 million carats being sold.

“Zimbabwe’s diamond industry has huge potential, but it is urgent that we deal with huge issues of leakages, arbitrage and compliance with international standards,” said Minister Biti.
The manufacturing sector will grow by a marginal 2,7 percent this year and 5,7 percent next year.
Absence of medium- to long-term capital, erratic power supplies and high production costs have affected competitiveness.

A spotlight on the financial sector showed 15 of the 24 banking institutions have already met the minimum paid-up capital requirements, while an increase in deposits to US$2,3 billion from US$1,3 billion recorded in January reflected improved confidence in the banking sector.

By August, lending to Government and the private sector had increased to US$1,4 billion from US$760 million in January.

Exports grew by 31 percent to US$2,5 billion from US$2 billion with mineral exports contributing 46 percent of earnings at US$1,2 billion this year.-The Herald-AFP