Zimbabwe to rejoin queue at doors of Western banks

Zimbabwe to rejoin queue at doors of Western banks

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ZIMBABWE – The $3.85-billion (about R55-billion) budget announcement was attended by President Robert Mugabe.

Zimbabwe is burdened with a $10-billion debt to the International Monetary Fund, World Bank and other lenders. Chinamasa spoke strongly on the need to ask the West for budgetary support and fresh lines of credit.

Patrick Zhuwao, the indigenisation and empowerment minister, who is also a nephew of Mugabe, has been most vocal against Chinamasa’s re-engagement efforts. He has been supported by War Veterans Minister Chris Mutsvangwa.

Both have publicly dressed down Chinamasa.

“A $1.5-billion debt owed to lenders will be cleared in the first half of next year … This should please the international community, which is already keen to do business with us,” said Chinamasa.

“The national budget’s thrust is to consolidate a platform to unlock fresh capital.”

Zimbabwe’s economy has grown by 1.5% this year, but this has been driven mainly by tourism and construction.

“The economy is expected to grow by 2.7% in 2016,” said Chinamasa. However, he admitted that high expenditure levels meant the government had little in its coffers to carry out capital projects.

Recurrent expenditure is at 93%, while capital expenditure stands at 6%.

The salaries of the government’s 250000 public servants gobble up the bulk of revenue.

Zimbabwe’s mining sector has not been spared from the global fall in commodity prices, with the sector recording negative growth figures in the past year.

“To cushion gold miners we propose to reduce the royalties … The gold royalty is reviewed downwards from 7% to 5% effective from October,” he said.

The poor performance of the agriculture sector, at -2.3%, is expected to continue, underpinned by successive droughts.

The decline in agriculture is an indictment of Mugabe, who embarked on a violent land seizure in 2000 premised on giving land to landless Zimbabweans.

In a bid to support the sector, the Treasury would incentivise the production of crops, mainly cotton. “We will give farmers inputs for the next three seasons,” Chinamasa said, to a round of applause from Zanu-PF legislators.

Farming inputs are usually politicised by the Zanu-PF government, with MPs from the opposition Movement for Democratic Change, led by Morgan Tsvangirai, intent on suing first lady Grace Mugabe for recently doling out farming inputs from a loan financed by Brazil.

Independent economist Vince Musewe said the budget indicated Harare’s realisation that it could no longer continue going it alone.

The MDC said the budget was a “damp squib”.

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