Be bold,  Chinamasa told Minister Chinamasa
Minister Chinamasa

Minister Chinamasa

Business Reporters

Finance and Economic Development Minister Patrick Chinamasa (Pictured right) will present his mid-term fiscal policy review statement this week amid calls to free up fiscal space through a combination of bold policy decisions and major reforms. The policy statement, delayed due to a number of factors including the unavailability of the minister and other Government commitments, is probably one of the most difficult pronouncements given the limited room Minister Chinamasa faces.

Faced by a challenging liquidity situation, dwindling Government revenues due to a shrinking revenue base against a high civil service wages bill, the Finance and Economic Development Minister announces a statement which economists believe should be based on bold policy decisions which Government should take.

It is expected, however, that top of Minister Chinamasa’s agenda will be agriculture, based on the new $500 million Command Agriculture initiative launched by Government recently.

The Command Agriculture initiative seeks to achieve self-sufficiency in the provision of food for the next three to four years with 400 000 hectares throughout the country dedicated to grain production for a yield of at least two million tonnes of grain per season.

In that regard, Minister Chinamasa is expected to comment on how Government intends to fund the initiative. The minister is also expected to touch on how far Government has progressed with the civil service and parastatal reforms and on strengthening public finance management.

These measures are believed to have a huge role to play in freeing up fiscal space and more importantly refocus Government expenditure patterns.

Economist Dr Gift Mugano believes that Minister Chinamasa should announce bold policy measures if Government is to change the economic trajectory and kick-start economic performance.

“We are not expecting any surprises from Minister Chinamasa, but the most obvious thing; a bold statement to boost confidence. I am looking for a budget which is policy oriented; reform oriented with confidence building policies,” said Dr Mugano.

“We cannot talk of supplementary budget because we don’t have the money.”

Dr Mugano said confidence would help attract investment, particularly in the manufacturing and mining sectors. Efforts to address competitiveness must focus on issues around ease of doing business, high corporate taxes and the litany of statutory fees constraining viability in key sectors such as the gold and platinum mining industries.

Dr Mugano said Government should rationalise multiple taxes in the mining sector on the back of subdued prices. To support local manufacturers, Dr Mugano said the minister should consider tax cuts for companies which are supporting the local value chain and leverage on value added tax.

Local economist Brains Muchemwa said the review should be centred on Government expenditure because the current fiscal deficit is not sustainable.

“For Government to address the current challenges there are two feasible solutions that can be implemented in the short term. The first option is for Government to institute massive civil service reform. Another option would be to reduce salaries across the whole civil service in nominal terms.”

Another economist Dr Godfrey Kanyenze said Minister Chinamasa should shed light on the way forward regarding the civil service Bill which is hovering around 80 percent of expenditure.

“We all know what is happening, with liquidity challenges, the country has been struggling with salaries and we need to know where we stand. This year has also been hampered by the El Nino drought and the effects of global prices on commodities,” said Dr Kanyenze.

He said Minister Chinamasa should also speak on how the Government intends to plug foreign currency leakages, estimated to be around $1,8 billion per year.

“We are also losing $1,8 billion every year and this is enough to meet the IMF debt and what is needed is to plug in those loopholes. Zimbabwe is not poor in terms of resources but the problem is on stewardship. If we put more efforts at safeguarding our resources, and plans on curbing corruption, our fiscal space will not be as constrained.

“If I were the minister, in the second half of the year I would put 110 percent effort to stop any further leakages.”

Dr Kanyenze added that there was need to realign expenditure, tighten screws on public expenditure and ensure the money goes to critical basic social services such as health delivery system, education, water and sanitation.

Givemore Mesoemvura, president of the National Bakers’ Association of Zimbabwe said there was need for Government to highlight the need for a conducive operating environment for the private sector.

“We expect Government to facilitate a conducive operating environment. The cost of doing business in the country should also be addressed by the MTP because as industry we think that we are being overtaxed.”

With Minister Chinamasa unlikely to come up with a supplementary budget in light of tight fiscal space, Zimbabweans are expecting none other than a review statement that stimulates confidence. He is also expected to provide an update on the debt clearance strategy as part of the re-engagement with the international community.

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