Increasing budget deficit a sign of ZANU PF madness
By Jacob Mafume
The hallmark of running a successful economy is the ability to balance the books, a functional government must be able to live within its means and ensure micro economic stability.
ZANU PF lives beyond its means; the government has failed to achieve a fiscal balance since assuming control of the treasury in 2013.
We in the People’s Democratic Party have always argued that the best economists are not your Paul Volcker(s) and Alan Greenspan(s) of this world but our grandmothers in Dotito and Chiendambuya who know that you live within your means by spending what the family earns otherwise you sink in debt and become a community enemy.
Chinamasa and ZANUPF have been implementing voodoo economics which have seen government expenditure ballooning out of control.
Today’s Newsday reports that “Zimbabwe’s budget deficit surged by 44% in the first quarter of the year to $230, 8 million from the comparable period in 2016, as government failed to contain its reckless spending patterns.”
Total expenditures for the period January to March 2017 amounted to $1,1 billion, which was way above the revenue of $869,2m realised in the period.
Expenditure was dominated by recurrent at $879,1m, while capital expenditures and net lending amounted to $173,3m.
The government’s failure to live within its means has resulted in the budget deficit ballooning to 44%, while domestic debt has also ballooned.
The huge chunk of the debt is in the form of toxic treasury bills which now amount to 60% percent of GDP.
The government has also started implementing quasi fiscal activities through the RBZ, activities range from the mooted loan to fund the ESKOM debt, a tertiary education loan facility, 73 million dollars pledged to fund women’s projects.
These activities will further exacerbate the budget deficit and increase burden on the tax payer considering the fact previous debt from the quasi fiscal activities had to be adopted by the government through the RBZ Debt Assumption Act of 2015.
More importantly the strategies being implemented are not backed by any economic principle; it is just but a dog’s breakfast.
It is obvious that the function of macro-economic projection in government has ceased to be a science but an act of political prophecy, not based on figures and credible assumptions.
More importantly, it is implicit in Section 305 of the Constitution, that any expenditure appropriated from the consolidated revenue fund in a financial year must be met with approved revenues from the Consolidated Revenue Fund.
Our point is therefore that the Zimbabwean Constitution does not allow for the provision of a budget deficit.
Despite the evidence of a huge deficit and that there is no
hope for the government to achieve a primary balance under Chinamasa, Mnangagwa continues to flummox by saying the opposite.
Yesterday Mnangagwa told a gathering that Zimbabwe had the capacity to fund its own development projects when the official government indicators are that 90% of revenue is consumed by recurrent expenditure.
Mnangagwa is however not new to the world of hallucination, a few weeks ago he claimed that there is 9 billion dollars idle in the banks, when broad money supply in circulation is theoretically six billion as per RBZ figures.
We therefore emphasise the need to restore macro-economic stability in Zimbabwe.
- In this regard we contend that fiscal discipline must be maintained and that the government must immediately resort to the principle of cash budgeting.
The philosophy of “We Eat What We Kill” must be the new dominant philosophy in government
Further the budget deficit of 44% and the domestic debt amounting to 60% of GDP must be eliminated urgently.
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- Retrenchment of government expenditure especially the reduction of Mugabe’s trips must be implemented as a matter of urgency. The size of the public sector increased from 236 000 employees during the Government of National Unity (GNU) to 550 000 workers in the post GNU. This effectively means ZANU PF has recruited 314 000 ghost workers in a space of three years.
There is a need to suspend at least 200 000 of these ghost workers pending a thorough audit.
- Government must immediately repay all the monies that it has stolen and raided from the Central Bank of Zimbabwe to ensure Financial Sector Stability and Liquidity.
- We propose the rationalization of state owned enterprises through disposals and commercialization. Air-Zimbabwe, ZIMDEF and CSC are examples of state owned enterprises whose sole function is that of capturing rent for ZANU PF elites.
- The government must implement supply side solutions including altering its accumulation model from raw extraction to beneficiation. There must be an overhaul of the mining, diamond statutes and the repealing of the Indigenisation Act.
- Finally a government which fails to maintain a primary balance and breaks the laws regulating public finances must resign or be removed by the citizens.
Together Another Zimbabwe is Possible
Jacob Mafume
PDP Spokesperson
