2015 budget nothing but hot air: Elton Mangoma

By Elton Mangoma

“… the health delivery service is deteriorating, leading to unnecessary deaths with funeral parlours receiving the Best Business of the Year award.”

The 2015 national budget presented last month is another clear indication that the illegitimate Zanu PF government continues running the country in a toxic retrogressive manner.

Sadly, for the people of Zimbabwe this has resulted in the long suffering of the people coupled with massive job losses, an unprecedented number of school dropouts and an increase in death rates.

The 2015 national budget that was presented by finance minister, Patrick Chinamasa, last month clearly demonstrates that Zanu PF remains clueless in taking any corrective measures to resuscitate the economy.

There is no progressive action that has been included in the national budget and, while Zanu PF calls this policy consistence, it is in fact policy inconsistency; they are implementing the wrong medicine at the expense of the people’s lives.

The 2015 national budget is a flat and uninspiring fiscal plan that has no ingredient to inspire any form of investor confidence that the country is desperately in need of. While the economy is shrinking, revenue collection continues to decline and is way behind what was collected in 2013 and the depressed situation is set to continue in 2015.

There is nothing on the horizon that points to improving government revenue; instead all signs are pointing to a total collapse of the economy, clearly indicating that the Zanu PF’s ZimAsset programme is nothing but hot air.

The government expenses are out of control and the country has a national budget deficit of US$386 million as of October this year. This spiralling debt was unheard of during the inclusive government era.

As a result, the Zanu PF government has resorted to huge borrowings in order to meet the salary requirements of the civil servants while the mooted retrenchments of the public servants announced by Chinamasa, should be focused on streamlining the government ministries and not the ordinary workers.

The borrowing to cover the budget deficit by the government results in the overcrowding of the productive private sector. To cover this budget deficit Government now has an overdraft of US$46 million with the CBZ, issued Treasury Bills (TBs) of US$264 million, not paid input suppliers US$45 million and raided US$34 million in statutory reserves from the Reserve Bank of Zimbabwe.

This is a very dangerous and unsustainable move which will cause the economy to contract at a faster rate. This has resulted in the financial sector facing instability, while input suppliers have seen the government being the chief architect of company closures and failures, especially affecting the already vulnerable SMEs.

Government’s borrowings are crowding out the private sector and creating a vicious circle, which, if it continues unchecked, will lead to the total collapse of the economy, job losses and more suffering among the people.

In the 2015 national budget, the allocation for social services is very insignificant especially at a time when the health delivery service is deteriorating and leading to unnecessary deaths with funeral parlours receiving the Best Business of the Year award.

On the education vote, it is a mockery that less than two percent was availed with the presidential scholarship getting US$6 million and the cadetship scheme getting a paltry US$1million. The pittance will result in the rate of school drop outs rising to unprecedented levels.

It is only logical that the presidential scholarship be abolished as it is partisan and most of the degrees undertaken outside Zimbabwe are readily available locally. What is currently allocated to the Presidential scholarships should then be used to augment the support given to students at our local institutions.

We find it is also regrettable that in the budget, to cater for the disabled, only US$200,000 was allocated for the whole year, which is less than US$20,000 per month for the whole community.

Because of bad economic management, a huge debt has been accumulated by the Zanu PF government over the years and the ruling party should admit that it has failed and apply for debt forgiveness to allow the country to start afresh and the country to have access to new loans and spend more on social services delivery.

However, there is also need for a debt audit to ensure that there are no odious debts included. There is also need for the government to have legitimacy and bridging the credibility gap of Zanu PF in order to attract the foreign direct investment (FDI) that the country is in desperate need of.

Therefore, there is need to repeal the current Indigenisation and Empowerment Act and not formalising corruption in government ministries by ensuring that all line ministries operate within set guidelines.

The country needs policy changes to encourage Public Private Partnerships (PPPs) and Build Operate and Transfer (BOT) concessions. This policy will enable most infrastructure projects to be undertaken without the need to resort to further borrowings.

It does not make sense to increase the minimum capital of banks. This forces all banks to be large banks. Large banks will have serious negative effects as they are less accessible to SMEs. The key is to have small banks with appropriate capital adequacy ratios. The recent world economic decline was caused by the failure of large banks not small banks.

Zanu PF has also clearly shown that it does not like the new Constitution as only three out of 400 legal instruments have been realigned to the country’s new Charter. This is also an indication that the ruling party has no capacity to fix the economy.

On agriculture, the presidential inputs scheme, which receives US$252.3 million, remains highly compromised as it is partisan and discriminatory yet the money is coming from the national budget. All assistance to farmers should be done through the agriculture ministry and financial institutions.

At the same time the household food security programme should be complimented with the national food security (NFS). The NFS requires access of between 300,000 to 400,000 hectares of land for maize growing.

Access to funding under the NFS should be available at commercial rates and, more importantly, there is need for the capacity to purchase and pay for the produce. This necessitates to operationalization of the commodity exchange.

It is unfair for farmers that after supplying their maize to the Grain Marketing Board (GMB), the parastatal is failing to pay them and hindering them from planting again. The GMB currently owes farmers US$47 million and the farmers have become destitute.

The GMB is also not refunding or reporting on money raised when it sales the maize and other produce financed by the government. The funds from the GMB are being siphoned to fund Zanu PF activities like what has been reported as happening at ZESA. There is need for an enquiry into the operations of the GMB, ZESA and all other parastatals.

Government intends to tax the beneficiaries of the land reform programme in order to pay compensation to white former commercial farmers. However, A1 farmers should be exempted from paying this land tax. A1 farmers have been improvised due to lack of support from the government.

What is critical is for all land beneficiaries to have security of tenure so that they have peace of mind and also access to resources to fund their operations. The credit facility that the government is securing from Brazil to bring in farming implements such as disc ploughs, disc harrows and fertiliser spreaders, is destroying jobs in this country.

There is adequate capacity to manufacture such items including the informal sectors in places like at Magaba and Siyaso in Mbare, Harare.

The country can therefore only move forward if there is the establishment of a National Transitional Technical Council (NTTC) whose mandate is to work on increasing FDI and economic growth. The NTTC will comprise of competent technocrats not involved in politics.

There will be a need to implement all necessary political reforms that will ensure that the next elections that the country holds are free, fair, credible and uncontested.

The people of Zimbabwe are in need of better economic prospects and the only way to achieve this is if we are to concentrate on reviving our economy and correcting our politics.

Elton Mangoma is the MDC Renewal Team Treasurer General