(Last Updated on November 22, 2015 by Editor)
ZIMBABWE – Zimbabwe’s economic prospects do not look any better in the coming year, an opposition party has said ahead of next week’s national budget presentation.
People’s Democratic Party (PDP) secretary for economic affairs Settlement Chikwinya in a pre-budget statement released Thursday said government revenues will shrink further in the coming financial year.
“The outlook period of 2015/2016 will see further economic destruction with growth rates remaining at minus 7 percent of the GDP.
“The country’s structural challenges of power, El Nino, the collapsing international commodity prices and the absence of meaningful Foreign Direct Investment (FDI) will guarantee permanent headwinds,” the opposition party said in the statement.
Zimbabwe has been struggling with an economic meltdown over the past decade and half exacerbated by political crisis characterised by disputed elections and rows in the ruling Zanu PF party over President Robert Mugabe’s succession.
Successive Finance Minister including the current treasury chief Patrick Chinamasa have struggled to raise funds to even pay government workers let alone to fund developmental projects.
“In turn, revenue collection will shrink dramatically in the face of massive retrenchments and company closures, leaving Chinamasa with the only option of having to arbitrage the economy through the issuances of toxic treasury bills, which are now already suffocating the economy,” said Chikwinya.
“This government is broke and is now sustaining itself through the fiction of false instruments that are now clogging the market. This fiction cannot last forever and a complete seizure of the engine is inevitable.
“Borrowing from the market through treasury bills has created a quagmire which now stands at more than 30 percent of the GDP.
“The bottom line, therefore, is that there is structural fiscal equilibrium and total lack of resilience in this economy”.
The opposition politician said a “serious budget” would look at how best to get Zimbabwe out of the recession and deflationary status quo currently existing.
“In our view as the People’s Democratic Party (PDP), the 2016 national budget would have to focus, on among other things, massive retrenchment of the recurrent expenditure particularly wastage expenditure on travelling, vehicles, excessive diplomatic missions, parastatals and patronage.
“The immediate removal of the over 20 000 ghost workers on the civil service payroll in order to reduce the government payroll to 30 percent of expenditure and 8 percent of the GDP,” the party said.
Chinamasa has already given a hint that the bloated civil service will need to be trimmed, sending shivers through the government service as fears of a brutal job cull grow.
Chikwinya urged government to prioritise investments into social services and provide collateral to new land owners who benefited from the chaotic and often violent land reform exercise.
“Investment in Public-Private-Partnership (PPP) and Build-Operate-Transfer (BOT) projects particularly in the energy sector and revisiting the informal sector and investing in small medium enterprises (SMEs), vending communities and making them bankable and formalised.
“The above proposals are a small step in addressing the current challenges in the country.
“In any event, the budget is a tiny component of a broad fiscal strategy or economy,” he said adding if not “2016 will yet again be another big yawn and a missed opportunity.
“Zanu PF lacks the ability, desire and competence of running this economy.
“After all, Zanu PF created much of the problems the country is facing and problems are never solved on the same problems and platforms that they were created on.”
The opposition party said GDP rate has shrunk from a high of 11.9 percent in 2012 to 1.5 percent in 2014 and an expected minus 3.5 percent in 2015.