Editorial Comment: A good Budget for Zimbabweans

27 Nov, 2020 - 00:11 0 Views
Editorial Comment: A good Budget for Zimbabweans Minister Mthuli Ncube

The Herald

The 2021 Budget presented by Finance and Economic Development Minister Professor Mthuli Ncube retains the fiscal and monetary stability and discipline that led to that stability, but goes far further than most believed possible to drive production and growth, funded largely by collecting taxes from tax cheats and imposing strict discipline on spending to allow far higher sums to be spent on capital expenditure.

The main thrust of his spending is to accelerate building infrastructure and support the productive sectors to push economic growth fast, as required by the National Development Strategy 1, which sets his targets.

But the Budget also pushes a major social agenda that access to the growing economy must be expanded to give as many people as possible an opportunity to join, and that the vulnerable groups cannot be left out.

That requires a range of Government interventions from guaranteeing and helping capitalise farmer loans, to ensuring small businesses get a break, to social payments to the poverty stricken.

The final point, and perhaps the least popular in some circles, is that everyone who earns more than a poverty income needs to pay some tax.

He has adjusted and widened the range of presumptive taxes from the equivalent of US$30 a month, US$1 a day, to be collected from each market stallholder by their landlord to $500 000 a month for doctors, lawyers and engineers who have not filed accurate business accounts with Zimra and collected a tax clearance certificate.

But the Minister feels that others besides PAYE taxpayers, major companies and consumers through VAT and customs duties need to chip in.

This year was a bad year for the Finance Minister with the payments still required to fix cyclone damage and the large sums needed to fight a pandemic which in turn caused modest economic retraction.

Yet Prof Ncube will end 2020 with a deficit of 0,5 percent of gross domestic product, a trivial amount, and due entirely to the large July payments he had to make to fund measures to contain Covid-19 and ameliorate the damage the pandemic was causing.

He ran a budget surplus for nine months, a small monthly deficit for the first two months of Covid-19 and a large deficit in July when the bills came due.

But as he noted, if you have budgeted prudently you can cope with the unexpected when serious problems hit.

VIEW FULL BUDGET STATEMENT HERE:

http://www.zimtreasury.gov.zw/index.php?option=com_phocadownload&view=category&id=65&Itemid=790

But even with all these challenges, he still manages to keep employment costs to just under 40 percent of his spending and capital spending pushed dramatically to around one third of every tax dollar.

And next year he reckons he can do better with a bigger economy generating more revenue and tighter enforcement of tax rules.

The biggest Government interventions in the economy remain with agriculture, where the thrust remains on empowering farmers to produce more, and produce more per hectare, for the benefit of themselves, the nation and industrial sectors that need raw materials.

But even here, the Minister is looking at further tightening controls to make sure farmers fulfil contracts and pay back what they borrow.

Infrastructure in all its forms takes a big chunk, spread across several ministries, and the budget is not only finding more money for this, but is also rectifying what some see as past neglect.

Bulawayo gets more than half the budget on improving water supplies, for example, the Harare-Chitungwiza-Ruwa conurbation is only number two.

The stress on infrastructure is important. While the private sector is meant to lead wealth creation, all the way from a single smallholder farmer harvesting more to a major investor opening a new mine or factory, all those producers need things like power, water and roads.

So the Government, in effect, has to spend the slice it takes from that new wealth being created to making sure that these golden geese have what they need to keep producing and expanding production and exports.

Converting the National Development Strategy into a one-year budget is not a process of copy and paste. The NDS1 sets targets and integrates requirements to push Zimbabwe forward.

The Budget, in far greater detail, has to first figure out how much the Government can spend, basically what it earns in taxes plus a tiny bit extra for income producing capital investment, and then figure out how to chop up that global figure into the little boxes that each ministry spends on each item. But the boxes are largely defined by the NDS1.

The switch in budgeting thought to the Second Republic’s process of count the income before planning the spending is what has produced the fiscal stability that our growth can rest on, and the monetary stability that was able to follow once we stopped monetising Government debt, what is called printing money.

And Minister Ncube made it clear that fiscal prudence remains a major priority. What he is doing is converting the results of that prudence into what is required from Government to pushing the economic and social growth that we all want.

As the Minister noted, no ministry received anything like what it wanted, as permanent secretaries have been telling Parliamentary portfolio committees for several weeks. But he has scraped the barrel to give each Ministry what they need to start fulfilling the roles they are expected to play next year to push Zimbabwe forward under the NDS1 targets.

His past prudence and tight budgeting has created the position where capital spending is now almost equal to employment costs, and it is that spending that pushes the country forward sustainably to the day when we are not just a middle income country, but such a country with a middle income population thanks to policies that let almost everyone ready to work hard onto the                                          bus.

The budget backs the NDS in making sure our journey is for everyone, not just a lucky few and that we will not have vast numbers of people left behind in our economic and social progress.

All in all it is a budget that is prudent, but still exciting as it pushes Zimbabwe and Zimbabweans forward towards our Vision 2030.

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