ECONOMIC Planning minister Tapiwa Mashakada is in two weeks expected to report a somewhat lame performance of the medium-term plan (MTP) implementation after unrestrained expenditure threatened to derail the economic blue-print’s targets.
Report by Taurai Mangudhla
According to the First Annual Progress Report of the economic blue-print, which sets out the national priorities and investment programmes for five years from 2011 to 2015, government has missed most of its key targets since the policy was officially launched in July 2011 and June 2012 largely due to policy inconsistencies and uncertainties which have resulted in low investment inflows both foreign and domestic.
The country’s economic challenges have forced government to revise downwards economic growth targets for 2012 from 9,4 % to 5,6%.
The MTP, largely funded by the national budget, integrates national planning, budgeting and development financing.
Last year, Foreign Direct Investment (FDI) inflows remained anemic at below 3% of GDP while domestic investment levels of around 19% of GDP were way lower than the targeted 30 to 40% of GDP.
Although the Zimbabwe Investment Authority received investment applications worth US$6 billion from regional and international investors in 2011, actual commitments were very subdued at around US$387 million largely due to foreign investors’ concerns over implementation of the indigenisation regulations and general policy inconsistencies.
The Indigenisation Act compels all foreign owned companies to sell controlling shareholding to Zimbabwean locals.
Apart from indigenisation concerns, Zimbabwe has failed to meet MTP targets on account of a shrinking fiscal space for capital expenditure.
“The resource requirement of the MTP of about US$2 billion per year over five years represents some 66% of the national budget,” reads part of the report.
The current account deficit widened by 56,7% from US$1,9 billion to US$3,004 billion against an MTP target of US$858 million.
The economy is projected to register a current account deficit of US$2,8 billion in 2012.
Government recurrent runaway expenditure, now reaching almost 85% of the budget, highlights a need for the country to attract private investment and generate higher economic growth that improves budget inflows.
“Adding to the challenge of budget under performance is the late disbursement of ministerial allocations by treasury. Given the cash budget system in current operation, poor revenue inflows are affecting the timeous disbursement of funds,” the report said.
Bottlenecks within the government’s procurement and tendering system, under the State Procurement Board, have been cited as part of the challenges that are slowing down implementation.
The slow tendering hiccups, according to the report, increased costs and resulted in state owned companies losing competitiveness due to procurement delays in a fast global economy.