Eric Bloch Column

Govt profligate par excellence

By Eric Bloch

WITHIN the next fortnight parliament will be engaging in nationwide pre-budget consultative seminars in anticipation of the forthcoming 2008 budget.

n=justify>Concurrently, the Ministry of Finance (or is it the Ministry of Never-ending Spending?) will be seeking inputs from diverse sectors of society in general and of the economically active community.

The budget will have to address innumerable factors, ranging from revenue generation for the state to fiscal policies required to restore life to an extremely distressed economy, from debt-servicing to national expenditures and much else.

But foremost, the ensuing year’s budget must, albeit very belatedly, encompass everything that fiscal policies can do to contain Zimbabwe’s gargantuan, catastrophic, hyperinflation.

Government has consistently stated that that is Zimbabwe’s greatest enemy (although it is probably only the second greatest, for the greatest must surely be government itself), and if that is so, then it is incumbent upon government effectively to contain and defeat the enemy.

Admittedly, the elimination of hyperinflation cannot be solely addressed by government, for certain of the inflationary factors are neither occasioned by government, or within its means to combat them. But, even though it would be vigorously denied by government, the reality is that it is the primary cause of the crippling hyperinflation that afflicts Zimbabwe, and that in addition thereto, it is within government’s means to address most of the other inflationary factors.

Zimbabwe’s immense inflation is a result of many different circumstances, but incontrovertibly one of the greatest is the magnitude of government’s spending far beyond its means.

This is not a new development, but one that has been progressively developing over years, with government demonstrating total, irresponsible lack of concern for the consequences of its gross profligacy, for the vastly escalating quantum of its fiscal deficits and for its horrifically increasing debts and concomitant burden of debt-servicing.

Government has been reckless in its endless recourse to unsustainable printing of money and for its recurrent foisting upon the central bank of quasi-fiscal activities (the most recent being the agricultural mechanisation programme, with a very high proportion of the largesse of free equipment issues being to the already wealthy, to those with favourable political connections, and to those who will not avail themselves of the productive capabilities of the gifted machinery, but will merely hold it for so long as necessary until it is “safe” to dispose thereof).

Most of all, in its pursuit of its spending addiction, government callously disregards the pronounced inflation that occasions.

Government defends itself by contentions that it only spends that which it has to, for the essentials of the operations of the state and the wellbeing of its people, but those contentions are devoid of credibility, and there is much expenditure that could cease without any prejudice, save perhaps to some of the recipients of the monies expended.

This needs to be a key, primary focus of the Ministry of Finance, and of the parliamentarians in the forthcoming consultation engagements.

Space constraints do not permit for all the opportunities of expenditure reductions to be addressed, but the following are some of the many that should be fundamental to the 2008 budget. Among the greatest of the expenditures incurred by government is the vast interest that is payable upon the continuously upward surging debt. But the interest burden would, obviously, be considerably reduced if government would dispose of the parastatals and would apply the sale proceeds to the settlement of debt.

It is not the role of government to be in business — its role is to govern! Moreover, hardly ever has any government been as effective and successful in the conduct of business than is the private sector.

It is long-overdue for government to dispose of its business interests in transport (Air Zimbabwe, National Railways of Zimbabwe and Zupco), in communications (TelOne and NetOne), the media (ZBC, ZTV and Zimbabwe Newspapers), mining (such as Wankie Colliery), manufacturing (through the numerous ventures of the Industrial Development Corporation) and much else.

The populace would benefit from undoubtedly enhanced operations of the enterprises, including those that are operating viably and successfully, and governmental debts could be markedly reduced, thereby reducing the ongoing interest charges upon the fiscus.

Another very major expenditure is that incurred on maintaining an excessively great defence infrastructure. Bearing in mind that Zimbabwe is at peace with all its neighbours and that its only war is an economic one, the grossly excessive size of the armed forces is incomprehensible, unless government perceives that as its only security of retention of power!

Trillions of dollars are expended annually (to a significantly greater extent than expenditures on health services and education!) upon the army and air force, which do little other than ceremonial performances at the opening of parliament, of agricultural and trade shows and the like, save for involvement in enforcing foolhardy price controls, and assuming governmental functions through the Joint Operations Command.

Surely it is time to trim the Ministry of Defence and its underlying arms, and thereby help win the only war that Zimbabwe is actually engaged in.

Other trimming is also vastly necessary.

With a population of little more than 11 million, how can Zimbabwe justify having over 50 ministers and deputy ministers as well as nine provincial governors (who are resident ministers)? Each has a major support infrastructure of secretaries, administrative and finance officers and other personnel, large suites of offices, fleets of motor vehicles, housing and much else at an immense cost to the fiscus and, therefore, to the taxpayer, and contributing to the governmentally fuelled hyperinflation.

Zimbabwe’s ministerial set-up is very much greater than that of most developed, first-world countries, with considerably larger populations. Blatantly, the Zimbabwean ministerial structure is naught but “jobs for the boys” irrespective of the fiscal and ancillary negative consequences.

Of course, government perceives as essential expenditure that which is likely to preserve support for itself, and facilitate its retention of power, irrespective of the prejudice and suffering that may result for the masses.

Undoubtedly that was the motivation for the recent announcement of new houses for all of Zimbabwe’s traditional chiefs, and for the distribution to the same chiefs, only a few months ago, of new, executive-style motor vehicles.

Presumably that too was the principal motivation for the very costly and unaffordable distribution of farm machinery and equipment, even if that distribution was window-dressed and disguised as being targeted to enhance agricultural production.

One must also ponder whether the president is at such pronounced risk that it is necessary that wheresoever he travels he requires escorts many times in number those required by the majority of the world’s heads of state. One must hope that that is not so but, if it is not, how can the attendant costs be justified?

Zimbabwe could also save much expenditure, and foreign currency outlays, if it would close many of its embassies, consulates and like offices around the world. Could not one embassy in Brussels and one in London cover the entirety of Europe, with similar centralisation of diplomatic representation in many other parts of the world? In like manner, would not Zimbabwe’s straitened circumstances justify far fewer governmental travels abroad?

These are but a very few of the many opportunities available for expenditure curtailment, without prejudice to the population, yielding massive economic benefits, including inflation reduction. But government’s will to spend is without bounds. It is a profligate par excellence, and therefore such constructive budgetary measures are unlikely in the extreme.