NOT only did Finance minister Samuel Mumbengegwi appear clueless yesterday, he also walked the fine line between truth and deception when delivering his s
upplementary budget which was described in certain quarters as nothing short of scandalous.
Apart from mentioning that domestic debt stood at $8,1 trillion and that the interest component was $6,1 trillion, Mumbengegwi was unnervingly silent on the absorption of both the debt and the interest payment in his supplementary budget.
In fact a perusal of government’s blue book shows no interest payment or loan repayment – a marked shift from last year’s performance by his predecessor Herbert Murerwa who, with a sleight of hand, hid interest but acknowledged the debt.
Neither was there any mention of quasi-fiscal activities which government pledged to lift from the shoulders of the Reserve Bank of Zimbabwe (RBZ). Mumbengegwi made no mention at all of QFAs or their extent.
In addition Mumbengegwi made no mention of the $13,1 trillion government lost in potential tax revenue owing to the price blitz which have seen businesses almost folding.
Instead the Finance minister chose to defend the blitz by saying that government was forced to intervene to halt “economic carnage”.
“In response to the economic carnage, government was forced to intervene by instituting price monitoring and stabilisation measures for restoring sanity in the goods and services market,” Mumbengegwi said.
In short, his supplementary budget of $37,1 trillion — contrasting with ministry expenditure bids of $255 trillion — was deception at its worst as a clearly befuddled Mumbengegwi swept a great deal of pertinent detail under his ministerial carpet.
“These additional expenditure submissions now stand at over $255 trillion. This level of Supplementary Budget bids is beyond our domestic financing capacity,” said Mumbengegwi, helpless and hapless
His silence on how government intends to close the yawning chasm between expenditure requests by ministries and government departments has sent chills up the spines of business executives countrywide. Why?
There is enough evidence that the crisis bedevilling the country is set to worsen.
And because they know they will have to foot the economic cost of a government that does not want to accept its shortcomings — indeed is in denial about them — and the futility of their actions.
For the central bank, the situation is nothing short of calamitous. The RBZ now faces the harsh reality that they will have to continue printing money and remain the unwilling drivers of inflation or finance government activities from statutory deposits in banking institutions.
“I would say RBZ is in a tight fix,” said economist John Robertson. “They realise they will have to comply with government orders to print money or fund it out of statutory deposits.
“For government, excess liquidity means low interest rates. They can tell anyone to keep his money and source it elsewhere. Either way it will not be in the best interests of RBZ.”
Robertson said Mumbengegwi had been very generous in his budget beyond what revenue sources he could cobble up.
“It seems the minister was very generous in allocating what he does not have. It is obvious he cannot deliver what he has promised,” Robertson said.
Another economist with a local banking institution who requested anonymity said it was very clear that one or all were bad planners and that the supplementary budget was a farce.
“Either all ministers and their teams are very bad financial planners or it is Mumbengegwi and his team. One of the two teams is practically incompetent at financial planning and disclosure and I could bet my last dollar it’s the latter,” he said.
Certainly Mumbengegwi did not present a comfortable figure and at times one got the impression his speech would have sounded the same if he had held it upside down.