Whereas there appeared to be a common purpose when he prepared the current fiscal policy statement, next year’s budget is definitely going to be different. And President Robert Mugabe and his Zanu PF party have ensured that he will have a torrid time.
This time around his major headache will not be just ensuring key areas such as health or education get the best out of the budget, but he has to fund elections as well — thanks to Mugabe who is agitating for the polls.
Mugabe and his party have led the electorate down the garden path insisting the government of national unity cannot exist for more than two years as stipulated by the Global Political Agreement (GPA). Owing to such political chicanery, Biti has been ordered to budget US$200 million for elections to be held around June next year, according to Mugabe. This is asking for too much from an already troubled treasury that generates a mere US$140 million monthly and cannot even keep its own workers happy. To drive the point home, one has to realise that the US$200 million represents close to 9% of this year’s total budget and the major question is where will this amount come from?
It is likely that other areas will be starved as funds have to be made available for the elections. Instead of making sure that the economic stability registered after the adoption of multi currencies last year translates into sustained economic growth until the political environment becomes conducive for polls, eyes are now on having new debilitating elections. Mugabe would rather see good money thrown into the bin. In spite of all these issues, Biti is faced with the reality that he has to come up with a fiscal policy and get the job done. For the Finance minister, the uphill task is to bring new impetus into the economy as there has been stagnation for the greater part of the year after a promising start in 2009 following a decade of decline.
Capacity utilisation remains stagnant. Also multilateral institutions have not supported budget deficits from last year and chances are they will not in the coming year owing mainly to Mugabe’s failure to fully implement the GPA.
Biti’s homework is to ensure expenditure is within the range of what the state can collect and at the same time initiate new capital projects, especially infrastructure development. Roads need repair, dams have to be constructed, local authorities need to replace sewer and water systems, and all these may be hoping for something from the minister.
The real sectors are also hoping for something and agriculture which has been identified as a potential early responder to the stable economic environment may be the largest beneficiary in terms of allocation of resources and policy changes. It is expected that the minister will come up with a clear policy on how this sector can be supported. This, however, should not be to the neglect of other sectors such as mining, tourism and manufacturing which also have potential for positive growth.
It is also incumbent upon the minister to reassure investors on how secure their property is in the country, as the indigenisation regulations gazetted earlier this year compelling foreigners to cede controlling stakes in companies valued at US$500 000 to indigenous Zimbabweans continue to taint Zimbabwe’s image. In terms of policy, the minister is expected to give directions to the financial service sector which has failed to take off since the adoption of multiple currencies in February last year. This could be the biggest challenge as the previous budget statements have tried to reignite the flames but they have died down on the weight of the conflicting policy statements, the indigenisation regulations and a complete failure by the financial sector to come up with solutions to the current problems.
Biti is clearly in an unenviable position.