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Political uncertainty threatens 2011 budget

THE World Bank (WB) has warned that political uncertainty surrounding the coalition government could undermine Finance minister Tendai Biti’s plans to craft a budget statement highly expected to map out Zimbabwe’s economic recovery.

Nginya Mungai Lenneiye, WB country representative on Monday told delegates attending a budget consultative meeting between government and development partners that treasury could face  problems in writing a fiscal policy statement.
Biti  is later this month expected to announce a US$2 billion  budget and a 6,4% GDP growth as government continues to operate under a narrow fiscal space due to lack of significant lines of credit from multilateral lenders and limited foreign direct investment.
“In drawing the 2011 budget, the  Finance ministry continues to be faced by two types of challenges,” Lenneiye said. “First those that lie outside budget instruments like limitations associated with political reforms and low implementation capacities in government. Secondly, those that the budget can address — for example — reducing opportunities for arbitrage in the economy, tackling unemployment through economic growth, supporting the recovery of human capacity, and improving budget management.”
The coalition government formed last February has failed to implement a power-sharing agreement signed in September 2008. The Global Political Agreement between President Robert Mugabe and his long-time rival Morgan Tsvangirai and leader of the smaller MDC party Arthur Mutambara is reportedly on the rocks over sharp ideological differences.
Zimbabwe — currently saddled with a US$6,7 billion  external debt — will according to the Bretton Woods institution continue to receive support in the form of “Analytical and Advisory Activities”.
The technical support is primarily financed using both resources from various donors working under an Analytical Multi-Donor Trust Fund (A-MDTF), as well as from the World Bank’s own resources.
“A total of US$5 million is expected to be made available by development partners for the A-MDTF to support knowledge generation, sharing  and application, as well as responding  to government needs for technical assistance. In addition, the bank will continue to mobilise funding from internal resources,   provide modest grants at the moment estimated at US$23,6 million, for identified project interventions,” Lenneiye said.
Out of this grant, the health delivery system will receive US$15 million; agriculture US$4,9 million; Beitbridge Town Council water and sanitation rehabilitation US$2,7 million and piloting public works in safety net interventions US$1 million.
Apart from the huge debt overhang, Zimbabwe has failed to rehabilitate dilapidated infrastructure owing to poor performance of the vote of credit.
Official figures show that up to US$250 million was received from the US$810 vote of credit pledged by donors this year.
Biti blamed “lack of clarity or general agreement between government and donors” for the poor performance of the vote.

Bernard Mpofu

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