ALL eyes fall on Finance Minister Patrick Chinamasa this afternoon when he presents the Mid-term fiscal policy review amid widespread expectations. The economic performance statement is expected to contain measures to breathe vigour into the economy and grow State revenues. It comes as the World Bank has already revised the projected economic growth rate for Zimbabwe to 1 percent against Government’s 3,2 percent. According to the Ministry of Finance, Minister Chinamasa will present the review to the National Assembly and Senate today.
The minister has his hands full of issues blighting the economy, which will require extraordinary measures to address lethargic growth. Arguably, this is a daunting and unenviable take before the minister, but no doubt a call that should go without satisfactory and pragmatic solutions.
Top of his priorities will be addressing smothering economic growth, with the World Bank revising growth downward from 2,74 percent to 1 percent due to a poor agricultural season and falling global mineral prices.
Other niggling issues include a persistent liquidity crisis, low industrial productivity, uncompetitiveness, high taxes, falling revenue inflows, rising imports, stagnant export growth and unsustainable State wage bill.
In the wake of the growing problem of vending on the country’s roads, especially as it regards activities in the central business district, the policy must also pronounce measures to create new formal jobs. This will require bolder initiatives to attract foreign investment, which has recently included formation of special economic zones and enhancing the ease of doing business conditions among other efforts.
The nation waits to hear what Government has in store in terms of charting a sustainable course for an economy currently being rocked by relentless job cuts as companies resort to laying off to keep float. The recent Supreme Court ruling that companies can lay off workers after only giving three months’ notice seems to have unleashed a wave of job losses employers did not know how to deal.
But a closer look at the issues should tell us all that these are only symptoms of that economy that is not doing as well as it should. Costs remain high while demand, due to incessant job loss, is plummeting.
It is common cause that there can be only one option and direction; fixing the economic challenges stifling growth among them addressing the liquidity crisis, attracting foreign direct investment, enhancing agricultural and industrial productivity and fixing enablers.
Key enablers such as the National Railways of Zimbabwe, Zesa Holdings, Air Zimbabwe, TelOne, the Zimbabwe National Roads Authority and local authorities are doing markedly less of the performance required to steer the economy out its present challenges.
That Zimbabwe with its limitless natural resources received a paltry $545 million in foreign direct investment in a region that attracts over $10 billion annually just goes to show how much ground we need to cover.
Failure to address the challenges blighting the economy will spell an uncertain future and vicious cycle that could, apart from aiding deindustrialisation, retard implementation of Government programmes.
Progress has been noted in aspects of Government’s medium term policy, Zim-Asset 2014/18, but a lot should be done to achieve most of its targets. Zim-Asset targets average economic growth of 7,1 percent. While Minister Chinamasa may do little to address some sector specific challenges such as falling global metal prices, he must certainly come up with measures to deal with concerns around taxation.
Gold miners have complained about the level of royalties amid falling prices saying viability has been seriously compromised despite that slight reduction of the rate effected by Government this year. Platinum miners have also been whining about the 15 percent tax on export of un-beneficiated platinum saying added to the 10 percent royalty that was already in existence, effective rate of taxation was unsustainable.
Manufacturers will expect policy measures to curb the influx of low priced imports, especially from China and South Africa, which are crowding local producers with the net effect of furthering company closures.