Biti walks tight budget rope

ANOTHER year is about to pass and we now eagerly await the presentation of the 2013 national budget by the Finance minister Tendai Biti on November 15.

Report by Peter Gambara

The Ministry of Finance recently rolled out a programme of consulting the public on crafting the budget.

Over the past year we have seen many people including fellow ministers accusing Biti of failing to provide enough resources for a host of demands. However, it must be understood that what Biti tries to do at national level is like what most low and medium income households go through every month. Such households, faced with inadequate funds, have to prioritise.

After paying rent, most households are very careful about what food items to buy; sometimes they chose to delay payment of electricity bills so that they can raise enough school fees that month.

There have been situations with such families where a younger sibling is asked to postpone starting tertiary education so that the parents can first finish paying fees for the elder brother or sister.
This juggling by households is the same balancing act Biti has to perform at a national level.

Biti has always stuck to his philosophy of “we eat what we kill” and now that his ministry is consulting on the budget, let us make our input before the budget is presented. In doing so let us suggest how he can improve the “kill” from US$3,4 billion that he worked with in 2012. Surely he cannot increase Pay As You Earn as the incomes for most workers are just too low.

Civil servants have actually indicated that their salaries are below the poverty datum line and need a review. Most workers in the private sector have to go without salaries or wages for many months as their companies are struggling.

A drive through most companies in the industrial areas today will reveal a subdued situation. Most industries are a pale shadow of what they used to be in the 1980s and 1990s.

Looking into the horizon, this situation might actually be with us for a long time to come. The market’s illiquid state makes the recovery of these industries very difficult. It therefore goes without saying Biti cannot increase company tax, for doing so would simply drive them over the edge.

An increase in Value Added Tax would simply increase the prices of most basic commodities when the average earnings of our workers are still meagre.

Biti can however play around with increasing customs and exercise duty on some goods, but generally it just means the consumer will end up paying more. The increase in exercise duty on fuel during the mid-term fiscal policy review statement led to an upward trend in the fuel prices and the trend seems to be persisting. The minister must ensure that if any lobby group approaches him on that he consults all other stakeholders.

This leaves Biti having to look at the minerals like diamonds and platinum as an option. So far the contribution of these minerals has not been significant. Whilst a few of the diamond companies like Mbada Diamonds have been visible in making remittances and social responsibility programmes, including supporting local soccer, the same cannot be said of the rest of the mining companies. The performance of the economy though seems to move in tandem with how the agriculture sector performs.

During consultations Biti will get all sorts of grievances including the water crises in Harare and Bulawayo which has gone out of control. Some households now have to go for over two weeks continuously without water.

Can Biti please provide some resources in the 2013 budget for these municipalities or Zinwa to fix the problem. We hear Morton Jaffrey waterworks in Harare were designed for just a million households, but with the expansion of Harare, Chitungwiza and surrounding areas, surely the infrastructure can no longer cope.

The suggestion by Water minister Sam Sipepa Nkomo that municipalities provide the first 6 000 litres to households free of charge elicited some startling disclosures from the Harare municipality officials who claimed this would deprive them of at least US$750 000.

That means the municipality is making over a $1 million dollars from selling water to residents. The question that arises is: where is that money going to and why can’t we use it to fix the recurrent water works problems?

The second issue concerns water charges to farmers. A lot of farmers have abandoned growing wheat due to a host of problems including unreasonable water charges. Can the Minister consider scrapping charges for irrigation water that is drawn from farm dams and boreholes for 2013 as a way to encourage farmers to use the water?

Zinwa can still make its money from selling treated water to urban dwellers. While most low and medium income families have just one breadwinner and have to balance their needs against their incomes.
The same should apply to our government.

While we appreciate they do not have enough resources to meet the country’s needs, people do not expect the same cash-strapped government to be extravagantly buying expensive cars for ministers and MPs every now and then when taxpayers are suffering. Biti’s budgetary balancing act must address key national issues to maintain and sustain economic and social recovery.

Gambara is an agricultural economist and consultant with AgriExpert. He writes in his personal capacity.