Govt Must Cut Spending

AMONGST the many causes of Zimbabwe’s shattering, world’s highest-ever inflation, one of the most pronounced is excessive government spending.

Year after year, and to an ever-increasing extent, the Zimbabwean government has spent far beyond its means.

That spending has, to a considerable degree, been funded by borrowings, including extensive direct and disguised borrowings from the Reserve Bank.

In turn, that has driven repeated extensive printing of money, substantially unsupported by national reserves.

The great printing of money is one of the major factors fuelling inflation, and has irrefutably been one of the main causes of the record-breaking hyperinflation that has impoverished a majority of Zimbabweans.

If the catastrophic profligacy of government is to be halted, and thereby the devastating inflation significantly reduced, there has to be a meaningful reduction of government’s expenditure in real terms.

This was recognised in the 2009 Budget Statement of then Acting Minister of Finance, Patrick Chinamasa, and has since been reiterated by the recently appointed Finance Minister, Tendai Biti.

However, similar recognition has characterised many previous governmental statements and budgets over the years, especially over the last three years, but that recognition has not been matched by requisite reductions in spending.

But now Zimbabwe and its populace is in such parlous circumstances that it is absolutely essential that declared intents be converted into realities.

The time has come (in fact, it is overdue) for pious declarations of intent to be transformed into actualities, instead of recurrent non-fulfilment.

The opportunities of containing state expenditures, without prejudice to national needs, are many. With genuine will, government could readily reduce its fiscal outflows whilst still achieving both effective government and provision of national needs in general, and those of health care, social welfare, education, security, and the like, in particular.

Firstly, it is incomprehensible that, in order to serve a population of less than 12 million, Zimbabwe should have an aggregate of 71 ministers, deputy ministers and provincial governors.

Even disregarding the latter (and many of them deserve to be disregarded!), Zimbabwe has 61 ministers and deputy ministers.

This is approximately twice as many as in the United States, and yet all of Zimbabwe’s population could fit into New York! It is not only the direct cost of the ministers, inclusive of salaries, ancillary benefits and perks, but also the immense costs of their underlying infrastructures of secretaries and numerous staff, offices, motor vehicles and their chauffeurs, travel expenses, and much more.

With appropriate proportional reduction in numbers between the relevant three political parties, the structure of the so-called “inclusive government” can remain intact.

Similarly, it defies all rationality and reason that, in addition to a 120-seat parliament, Zimbabwe should also have a senate.

This is naught but the creation of jobs and sinecures “for the boys”, a luxury that Zimbabwe cannot afford, with a very considerable and costly infrastructure which should be speedily dispensed with — albeit necessarily requiring appropriate Constitutional amendment.

The reduction in the Public Service as a result of a substantive reduction in the number of ministers, deputy ministers and governors, and through discontinuance of a two-tiered parliamentary system, would be fairly substantial.

However, even greater cuts in the Public Service are very necessary. How on earth can it be justified that, for an overall population of less than 12 million, Zimbabwe has approximately 250 000 government employees?

First and foremost, there must be a major containment of the size of the armed forces. Zimbabwe has had peace with all its neighbours since Independence, and especially so since the “new” South Africa came into being in 1994.

The only war Zimbabwe has to fight is an economic one, and to have victory in that war it not only does not need a vast army, air force, Central Intelligence Organisation and ancillary militaristic entities, but would actually expedite victory in its economic war if it had markedly fewer armed and allied forces.

Moreover, if Zimbabwe focused upon having quality, capable civil servants, instead of many who are only fiscal parasites, it would need much lesser numbers. Its focus should be upon public service quality, not quantity.

In similar vein, state expenditures could be markedly reduced, without any deprivation of Zimbabwean needs, if there would be a significant reduction in the number of embassies, consulates and trade missions representing Zimbabwe abroad.

This would be doubly beneficial, for not only would the result be a meaningful reduction in costs of government, but would also reduce needs for foreign exchange.

Of course, Zimbabwe must have adequate representation internationally, but this can be effectively achieved by adopting regionalised approaches.

Surely two embassies would suffice within the European Union, being one in Brussels (the EU headquarters), and one in London, instead of a plethora of others.

Such consolidation has been effectively achieved by other countries, such as when New Zealand closed its embassy in Harare, and several others in the region, all the countries in Southern Africa being serviced by its embassy in Pretoria.

Yet another opportunity for major cost containment would be if government would now, belatedly, drive to curb widespread Public Service corruption.

Of course, there are many honest civil servants, but it cannot be denied that there are numerous who are corrupt.

Whether it be abuse of travelling expenses and allowances, misuse of state assets, unauthorised recourse to telephonic services, misappropriation of consumables, or otherwise, corruption represents a major cost to government.

There has long been talk of vigorous actions to bring about a concerted reduction in corruption, including as recently as in the 2009 Budget Statement, but most of the talk has been unmatched by any actual implementation.

It is well overdue for government to not only state anti-corruption actions, but to fulfil those statements.

A key element to achieving a balance between revenue inflows and outflows is also for government to now speedily progress the privatisation of parastatals.

Not only would doing so relieve government of having to fund the endless losses incurred by many of them, and of having to support so many of the parastatals with loans and guarantees, but in addition many parastatals’ privatisation could yield revenue flows to government.

Those revenues could settle some of government’s immense borrowings and other debts, thereby relieving it of much of its debt-servicing costs.

Doing so would not only help to reduce revenue deficits, but would also eliminate much need for further recourse to borrowings, and the concomitant interest and other debt-related costs.

There must be boundless other opportunities for government to achieve effective expenditure reductions.

If government has any genuine intent to curb inflation, restore economic wellbeing to a presently deeply troubled Zimbabwean economy, and to reinstate national and international confidence in Zimbabwe, it will now intensively strive to cut its spending.

BY ERIC BLOCH

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