HomeInternationalEric Bloch Column: Reversing effects of poor economic policies

DPRK’s options limited, analysts

Despite attempts to persuade them to recognise and acknowledge the need for dynamic, positive policy changes, the proponents and implementers of economically destructive policies are dogmatic in their adherence to those disastrous policies, and in their implementation.  They blind themselves to realities, instead attributing the economic ills to alleged misdeeds and evil machinations of others.  Nevertheless, Biti has to strive to conceptualise and implement fiscal policies which can counter and reverse the ills inflicted upon the economy by negative policies.

 

There are many vital actions that Biti must consider which must be energetically pursued within government, which include:

Containment of government expenditure.  There are many opportunities to do so, although undoubtedly some will be strongly resisted by sections of the political hierarchy, especially by Biti’s opponents and even some within his party. Among the expenditure cuts is the achievement of a marked reduction in public service salaries, albeit paying fair salaries and allowances. 

 

The reduction of the public service salary bill can be achieved through elimination of ghost workers. This is authoritatively said to exceed 70 000. The reduction can also be achieved by a progressive reduction in numbers actually employed through natural attrition.

Reduction of expenditure by cutting the number of ministries.  A country with less than 12 million residents does not require a president, two vice-presidents, a pime minister and two deputy prime ministers, 28 ministers and more that 20 deputy ministers.  Similarly, although constitutionally prescribed, a two-tiered legislature of 200 legislators and attendant personnel cannot be justified, let alone proposals for such number to be doubled in the envisaged new constitution. 

 

Due to the salaries and ancillary allowances payable over and above associated expenditure, the legislative and administrative infrastructure is excessive both in terms of remuneration and innumerable underlying costs, far beyond Zimbabwe’s means.  It is not within Biti’s power to override the constitution or the Global Political Agreement, but he can influence change both by appropriate representation, and by curtailing funding allocations to reinforce his representations.

Similarly, Biti should strive to influence a progressive reduction in Zimbabwe’s military services personnel.  The only enemy Zimbabwe has is itself, in the form of a deep political divide and gross political mismanagement, and its only war is an economic one, yet it has one of the biggest military infrastructures in the region.

Unjustified foreign trips by government are an expenditure area which is within Biti’s powers to contain. It is incomprehensible and unjustifiable that numerous delegations to meetings of the UN, AU, Comesa, Sadc and other entities include ministers, senior civil servants, spouses, security personnel and others, generally ranging from 20 to 80 in number.  Surely such delegations could be effective if they numbered between five and 10?

Further cost reduction by government can be achieved through the containment of corruption, ranging from public service ghost workers to unauthorised and unproductive travel costs, misappropriation and misuse of state assets, fictitious expenditures, secret commissions from suppliers and contractors (which inflate their prices and charges), civil servants’ personal consumption of consumables ranging from stationery to communication services, cleaning materials and fuel.

Biti needs not only to minimise expenditure, but also help revitalise the economy, for a vibrant economy yields far greater direct and indirect taxes than does one which is quasi-moribund. Admittedly, Biti can justifiably claim much of the credit for the containment of the economic demise which prevailed greatly prior to the “inclusive government” and his concomitant appointment as minister.  In contrast to many successive years of economic decline, 2009, 2010, and 2011 witnessed some economic upturn. 

 

Although significant in percentage terms, the economic growth was, in real terms, minuscule, for it was attained from a disastrously low base.  The harsh reality is that Zimbabwe’s economy continues to be one of the weakest in Africa, yet it has the potential for stupendous growth.

Achieving that growth requires continuous political and economic stability which is dependent upon government as a whole, and the electorate, but it is within Biti’s ability to influence as he has valiantly striven to do over the last three years. Amongst the measures and opportunities available to him are:

Once again to state emphatically and convincingly that under no circumstances will Zimbabwe revert to its own currency before there is real, and continuing, economic stability.  Many of the ill-informed populace continue to press for reversion to the Zimbabwe dollar, which would be a catastrophic return to the shattering hyperinflation of yesteryear. 

 

Such a return would intensify distrust of the banking sector, hence exacerbate the already grievous levels of financial sector illiquidity. This would in turn constrain availability to the private sector of working capital for productive operations.  Fears of reversion to the Zimbabwe dollar are also a major deterrent to investment.

In order to assure viability of the mining sector the minister needs to review recent increases in mining licence fees and royalties which are vastly in excess of those charged by all other countries with meaningful mining operations, as is also the enforced and envisaged increase in the sector’s tax rates.  Mining development has already been severely retarded by the ill-advised indigenisation policies, but is further impeded by existing and intended imposts.

These are a few of the mid-term budget review considerations which must be addressed by Biti. This column will next week address more of these.

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