HomeBusiness DigestIt's back to trillions!

It’s back to trillions!

Shame Makoshori

ZIMBABWE’S budget has bounced back to trillions of dollars, three months after the central bank removed three zeros from the currency.

In August, the Reserve Bank slashed three zeros from the Zimbabwe dollar after computer systems crashed for failing to handle multi-digit transactions.

The decision adjusted the 2006 expenditure from the original $451 trillion to $451 billion but rampaging inflation has continued to fuel money supply.

Analysts have already said two zeroes are back on the currency.

Presenting the 2007 national budget proposals in parliament yesterday, Finance minister Herbert Murerwa announced a $24 trillion budget with a 17% deficit.

Real GDP growth was however expected to remain at marginal levels of about 1%.

Most sectors of the economy were expected to either grow by marginal levels or decline as a result of rampaging inflation and acute foreign currency shortages.

One of the major driving sectors of the economy, mining was expected to grow by a marginal 4,9 %, agriculture by 9,4 % while marginal gains were expected in the key manufacturing sector. The 2007 budget translated to a growth of 5 313% over 2006’s anticipated expenditure outturn of $451 billion.

Driving the anticipated high expenditure were the Public Service Commission that was allocated $1,4 trillion for employment costs.

The Ministry of Education, trapped in operational problems that have seen many schools failing to get books and other requirements, was allocated $721 billion.

Agriculture’s allocations were broken down as follows: agricultural research institutions, $44,6 billion, training $6,2 billion, irrigation rehabilitation $33,8 billion, tobacco production $16,2 billion while $14,2 billion was committed to the 2006/7 summer crop.

Tourism was allocated $10 billion, with key emphasis on the development of infrastructure in the Great Limpopo Transfrontier Park
while the Ministry of Health, reeling under a financial crisis, got $590 billion.

As per tradition, Murerwa blamed the country’s economic crisis on sanctions that the west has imposed on Zimbabwe for violating human rights, lack of balance of payments support and a culture of pillage that has gripped Zimbabwe.

He promised to implement strong disinflation programmes, currently in four digit levels, to bring it to between 350% and 400% by December 2007 and subsequently to under 10% by December 2008.

“Failure to contain expenditures within the economy’s financial resource capacity would entail higher inflation, compromising prospects for economic recovery and growth,” Murerwa said.

“In order to achieve the inflation targets in the budget framework, it is imperative that greater focus be placed on the containment of monetary expansion, complemented by consistent and mutually agreed mechanisms of determining prices and incomes,” he said.

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