HomeBusiness DigestBudget 2007: a classic soap opera

Budget 2007: a classic soap opera

Dumisani Ndlela & Shame Makoshori

ZIMBABWE’S national budget has the characteristics of a soap opera: an ongoing episodic work of fiction with several plots runni

ng concurrently, intersecting, and leading into further developments.

But, while the twists in a soap opera make the audience laugh, or more expectant, the turns in Zimbabwe’s national budget leave stakeholders in shock and awe, and, yes frighted of a gloomy future.

Known for being unpredictable like fiction because of policy inconsistencies, Finance minister Herbert Murerwa last year promised something many believed would have required some Houdini magic.

“The major policy imperatives and priorities in dealing with the challenges (or national economic crisis) remain credibility and consistency of policies and their timeous implementation,” Murerwa said when he presented the current national budget last year.

Indeed, Murerwa could get the kudos for a consistent budget policy system achieved over the years: as expected, he was back in parliament end of July with a shock supplementary budget three times bigger than the principal budget.

But Isaac Kwesu, a University of Zimbabwe lecturer in the graduate school of management, was blunt: “This is in itself a sign of failure and it shows that the minister did not come up with proper forecasts on inflation.”

To many, this indicated the crisis of credibility in Murerwa’s proposals, signaled early in the year by accelerating inflation that had topped the 1 000% mark by June, astounding his forecast of declining inflation during the year which he projected to end 2006 at 80%.

“A lot of the promises, if not everything that he promised, were not achieved. For instance, expenditure levels did not tally with targets. That is the reason why he resorted to a supplementary budget,” said Kwesu.

Murerwa has come under intense criticism for unfulfilled promises, and recently took the flak from stakeholders for a failed privatisation programme.

In his budget proposals, Murerwa said at least six parastatals would be privatised. None has so far been privatised and the current budget has only a month of its life left before another one for 2007.

“It will be embarrassing that the minister will come back to the people with the 2007 budget without accomplishing these promises,” said Karikoga Kaseke, chief executive officer of the Zimbabwe Tourism Authority, during a stakeholders’ consultative meeting in Harare.

The International Monetary Fund (IMF), whose mission is scheduled to arrive in the country a few days after Murerwa’s 2007 budget proposals, has said inflation will this year average 1 216%, and 4 278,8% in 2007.

Gross domestic product, projected by Murerwa to grow by 14% this year, will, according to IMF projections, decline by a further 5,1% this year and by 4,7% in 2007 after contracting by a cumulative 30% in the past five years.

The civil service has not been streamlined as promised, while the civil service salary and wage bill, which Murerwa promised to contain within 30% of government expenditure, could now easily constitute 50% of government expenditure after unplanned salary hikes during the year.

In his plea for a vote on a supplementary budget, Murerwa had told parliamentarians that rising inflation had translated into operational costs for government ministries and departments, resulting in the need for additional resources.

“There have also been financing challenges that arise as a result of new projects and programmes outside the budget framework,” Murerwa said.He said new requests had emanated from operational requirements of line ministries and projects under an economic revival project, the National Economic Development Priority Programme, whose results are not visible eight months since inception.

“The overall requests by line ministries, departments and grant-aided institutions for additional funding to support recurrent and capital expenditure as well as projects under the NEDPP, now stand at $614 trillion ($614 billion under the new currency system). This is against new projected additional revenue of $140 trillion ($140 billion new currency), taking account of the higher nominal GDP of $840 trillion,” Murerwa said.

Kwesu said Murerwa had promised to rein-in profligate ministries but all ministries spent their budgets within three months and were rewarded with new budgets.

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