THE $37,1 trillion supplementary budget presented yesterday by Finance minister Samuel Mumbengegwi is inflationary, economic commentators said last
The commentators said it would be difficult to contain inflation which went past the 7 600% mark in July because the supplementary budget was nine times more than the original one ($4 trillion) presented last November by then Finance minister Herbert Murerwa.
Economist John Robertson said apart from the supplementary budget being inflationary, it would also militate against government’s recent price freeze on goods and services.
“While I am still working on an in-depth analysis of the budget, it is clear that it’s inflationary. The massive increase in various taxes would result in importers and service providers passing on the cost to ordinary people, thereby defeating the government price freeze,” said Robertson.
Mumbengegwi reviewed upwards customs duty on fuel, Noczim debt redemption levy, carbon tax, stamp duty and presumptive tax and rental fees for A2 farmers.
Robertson said the devaluation of the Zimbabwe dollar from $250 to $30 000 against US$1 will benefit the government more than exporters through import duty.
“There is no way inflation can be contained given the budget which is largely going to be financed through tax increases,” said Robertson.
Zimbabwe Congress of Trade Unions secretary-general Wellington Chibebe said the budget did not address the concerns of workers.
“It was a non-event in relation to the recently signed Incomes and Prices Stabilisation protocol by social partners. The protocol clearly stated that taxes should be linked to the poverty datum line, but the minister pegged the tax-free threshold at $4 million instead of the poverty datum line which is $8,2 million,” Chibebe said.
He said it was “shocking” to hear Mumbengegwi calling for social partners to play their part when the government recently introduced a salary freeze.
MDC secretary-general Tendai Biti dismissed the supplementary budget as disastrous.
“It’s a disastrous budget which reflects the Zanu PF government’s complete inability to turn around the economy or to offer anything valuable to Zimbabweans,” Biti said.
He questioned the wisdom of having a supplementary budget that is more than nine times the original one.
“One can tell that the government has no grasp of elementary fundamentals of economics,” Biti said. “How can you craft a budget which is not rooted in any economic policy? Ifembera fembera (it is guess work). How do you move from point A to B without following a set-out policy?”
He said while government declared inflation its enemy number one, facts on the ground prove otherwise.
“Instead of putting in prudent policies to fight the budget deficit as a way of addressing inflation, the minister in his budget is compounding inflation. This is disastrous,” Biti added.
Confederation of Zimbabwe Industries president Callisto Jokonya said he was yet to see the budget, while Zimbabwe National Chamber of Commerce boss Marah Hativagone was not answering her mobile phone last night.