EDITORAL COMENT: 2015 Budget sets tone for recovery

FINANCE_MINISTER_PATRICK_CHINAMASA_BUD_PFINANCE and Economic Development Minister Patrick Chinamasa yesterday presented the 2015 National Budget, a policy which sought to stimulate economic recovery.

Titled ‘Towards an Empowered Society and Inclusive Economic Growth,’ the Budget sought to strike a balance on the need to attract investment, stimulate production and also encourage consumer demand by reducing disposable incomes.

To that effect, emphasis was made on re-engagement with all the stakeholders, including foreign, which shows Government realises the critical importance of good relations.

It was really refreshing to note the numerous initiatives that the minister proposed to stimulate confidence, enhance industrial production, curb smuggling and reduce imports.

It was never going to be easier for the minister, but even individuals will look into the New Year with a tinge of optimism on the back of a few dollars put in their pockets through increase in the taxfree threshold of their salaries and wider tax bands.

Admittedly, the budget was developmental in that despite the fact the minister had to play a delicate balancing act due to limited revenue inflows, the minister did not further burden taxpayers by raising rates; in fact he reduced tax for exporting firms.

Local companies should take advantage of the incentives and policy measures announced in the National Budget, including measures to avail affordable lines of credit for industry.

But while low investments have largely been attributed to lack of clarity, predictability and consistency of policies, having done virtually the majority of what is practically possible under the circumstances, he could have fallen short on equity laws.

For years, Zimbabwe has been faced with difficult economic challenges, some of them to do with the sanctions but most of them to do with failure to make effective decisions, lack of policy predictability and the absence of will power to implement policies.

All the country’s operating ratios are in red in spite of the strong balance sheet that Minister Chinamasa always talks about.

Indeed, Minister Chinamasa has always talked about Zimbabwe’s strong balance sheet in apparent reference to the country’s rich mineral resource but extracting real benefits from such resources have always been a huge problem due to policies perceived to be preventing investment.

In yesterday’s Budget, Minister Chinamasa announced new modalities on indigenisation compliance which seeks to decentralise authority of approving proposals.

But opaqueness of the law still remains. What the minister essentially did was to decentralise the authority and give line ministries discretion to determine compliance structure.

The policy essentially remains in hands of individuals.

Investors are not worried about implementing agents of any policy, but clarity and consistency.

For a country like Zimbabwe, which is in desperately in need of investment, they ought to have provided more clarity on the policy rather than simply decentralising authority.

While resolving concerns around indigenisation is not the salvation to the issue of limited investment, it appears the fiscal policy did little to enhance clarity and predictability, if indeed reservations on the empowerment policy are about these issues.

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