Chinamasa to present 2017 budget on Dec 8

17 Nov, 2016 - 00:11 0 Views

The Herald

Business Reporter–

FINANCE AND Economic Development Minister Patrick Chinamasa will present his 2017 National Budget Statement on the 8th of next month amid tight fiscal legroom and hope for faster economic growth.The Minister will certainly have to walk the proverbial “tight rope” given contracting fiscal revenues and slower economic growth, as Zimbabwe battles the negative impact of tight liquidity, low investment and generally a difficult operating environment in the economy.

With little fiscal latitude, contracting revenue, increasing and desperate demands on the expenditure side, the minister has little space to maneuver; making planning for 2017 an unenviable task.

Minister Chinamasa projects fiscal revenues for the coming year to be around $4 billion, evidently little changed from trends over the last few years. Revenue inflows have continued to shrink as companies struggle for viability, downsize operations or shutdown outright.

“The theme for the 2017 budget is ‘Pushing the frontiers of Production,’ in keeping with the Government’s policy thrust to increase production and productivity in ongoing efforts to revive the economy,” Minister Chinamasa said in a statement released yesterday.

But there is hope 2017 will be better, as projected by the Minister of Finance, with new lines of credit seen flowing to public or private sectors, after the International Monetary Fund lifted over a decade long sanctions on Zimbabwe after the country cleared its arrears.

As a shareholder, Zimbabwe is now eligible to apply for fresh funding packages, to be considered on merit, but importantly too, the lifting of the embargo sends the right cues to other potential lenders who take signals from the stance taken by the global funder.

As has become the tradition the budget will largely be anchored on Zim-Asset, Government’s economic blueprint for 2014/2018, with a view to operationalize that particular long-term economic plan.

Minister Chinamasa has the puzzling task to unpack the economic challenges facing the country and immediately suggest effective solutions to resolve them and set the economy on strong growth trajectory.

According to the 2017 pre-budget paper, the economy is seen rebounding from the sluggish 1,2 percent 2016 growth forecast to a steely 4,8 percent expansion driven by reforms and external factors.

But challenges include tight liquidity, biting cash shortages, low savings and low investments (both foreign and domestic), lingering external debt overhang, food insecurity issues owing to low productivity, infrastructure deficits, and general financial sector constraints.

The Ministry of Finance’s projections say growth will depend on increased financing for agriculture, incentives for exporters, better mineral prices, improved investment climate, reengagement with International Monetary fund and other global funders and positive gains from measures taken to cushion local industry.

The budget strategy paper contends that a number of measures will also be required in 2017 in order to stimulate growth in productive sectors, including manufacturing, which is buckling under pressure of cheap imports, high cost of funding, out dated equipment, shortage and high cost of raw material and aggregate low demand.

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