FINANCE minister Herbert Mure-rwa yesterday said government’s failure to implement agreed measures was the major cause of the country’s deepening economic crisis.
“Failure to implement agreed measures can only send wrong signals, fuelling self-fulfilling inflationary expectations,” Murerwa said when presenting his record $7,75 trillion 2004 national budget to parliament.
“We should now address these challenges in earnest if the economy is to be turned around.”
Murerwa said the economy was expected to contract by 13,2% this year while inflation, currently at 525,8%, will rise to 700% early next year.
For the first time in the country’s history the minister dished out trillion-dollar amounts to various ministries. Eyebrows were raised when Murerwa told the House that he was earmarking a shocking $1,27 trillion for defence and security when there is peace in the region.
The figure was the third largest vote after the civil service wages bill ($3,18 trillion) and the Ministry of Education, Sport and Culture ($1,52 trillion).
The defence and security amount was higher than that for Agriculture – $587,6 billion – and Housing $10 billion. The meagre housing vote raises doubts about promises by President Mugabe last week that government would build a million houses in five years. It now costs about $15 million to build a basic four-roomed house.
Zimbabwe National Chamber of Commerce (ZNCC) policy manager James Jowa told the Zimbabwe Independent that like other budgets before, last year’s budget had not been a real budget at all. It missed all its targets.
“We have gone through 22 budgets but we seem to continue making the same mistake of living beyond our means,” Jowa said. “We love to spend what we do not have. Chronic fiscal deficits and supplementary budgets have been the chief architects of the hyperinflationary environment now prevailing in the country.”
He said of particular concern had been excessive budget overruns.
In August Murerwa presented a $671 billion supplementary budget despite admitting that the resources are simply not there.
“One may ask what then needs to be done?” Jowa asked.
“We do not need just an engine overhaul but a completely new engine to move the economy ahead.
“The Minister of Finance in his 2003 budget statement mentioned the need to restore confidence. He acknowledged what all of us had observed much earlier, that the agrarian reform had played a part in the negative publicity..
“But he did not announce the measures to be adopted to address these fundamental issues. Probably the issues are beyond the budget and the minister. But all the same it is quite refreshing that the government is at least aware of the centre of the problem.”