Chinamasa’s Romantic Budget

By Prince Tongogara

 Harare, December 19, 2013 – Finance and Economic Planning Minister Patrick Chinamasa’s $4.02 billion budget is a candid assessment of the country’s economic challenges but worryingly fell short on solutions and does not inspire confidence to both the investors and the market, analysts said.

 Chinamasa in his two-hour budget presentation delivered in Parliament on Tuesday highlighted that the country was facing incredible economic challenges that include erratic supplies of water and electricity, underutilisation of capacity in industries and dire liquidity crunch.

 Chinamasa further said that the economy is expected to grow by 6.1 percent in 2014 despite that in 2013 it only grew by 3.4 percent without giving concrete economic solutions to spur economic growth.

Respected economist Godfrey Kanyenze said: “Generally the budget was upfront and candid about the challenges but the prognosis to the issues was romanticised. His macro-economics projects can be challenged because they are not in sync with the situational analysis of the economy.”

Reacting to the proposed mortgage market to drive the housing policy and construction industry, Kanyenze said, “The devil lies in the details of the idea of the mortgage market and his solution is a bit simplistic.”

Entrepreneur and MDC-T legislator MP Eddie Cross said Chinamasa had little ground to move around his budget but at least got it right in his proposal to stabilise the banking market.

The Finance and Economic Planning Minister proposed the US$100 million recapitalisation of the Reserve Bank of Zimbabwe and the reintroduction of the interbank trade to stem out the liquidity challenges.

Cross said: “The minister was in a strait jacket politically on policy. He did a good job in trying to stabilise the banking sector but his economic growth forecasts were very optimistic. He has stuck to the Tendai Biti formula.”

The budget’s $4.02 billion revenue is premised on aggressive revenue collection and introduction of new taxes in mining and mobile money transfers.

Political analyst Jonathan Gandari was critical of the proposed taxation of mobile money transfers saying it was further taxation of the poor who were the majority users of this new system.

“The taxation of mobile money transfers will hit the poor more and is likely to retard the growth of the mobile money. Many people may be forced to use other traditional means of sending and receiving money,” Gandari said.

All the analysts polled by Radio VOP however agree that Chinamasa engaged in the art of political double speak when he was not very clear on the issue of civil servants salaries.

Chinamasa said the government will pay inflation adjusted salary increments while in the same statement said the civil servants will be paid salaries above the poverty datum line (PDL). The PDL now stands at $540 per month.

Chinamasa said the government was not going to relax the indigenisation policy that compels all foreign owned companies to surrender 51 percent of their shareholding to locals. He however, said foreign owners now had the leeway to choose their own partners and how they will be paid for the equity.

The Finance and Economic Planning Minister allayed rampant fears about the return of the Zimbabwe dollar and said the multi-currency regime will stay in place with the possibility of adopting other currencies and will also fund artisanal miners.

The government, Chinamasa said will set aside $20 million for the demonitisation of the Zimbabwe dollar accounts and increase fuel duty.