Cracks in Bitis’s financial plan

FINANCE minister Tendai Biti’s 2013 Budget has exposed cracks in Zimbabwe’s financial planning system, which are impacting negatively on the achievement of the country’s short and long-term objectives.

Report by Clive Mphambela

Last week, the 2012 GDP growth forecast was revised downwards to 4,4% from 9,4%, with Biti  saying “we are likely to witness a 5-year average of 5% going forward.”

Biti also reviewed the GDP growth target for 2013 to 5%, and that of 2014 to 6,5%, dropping to 5% in 2015.

This means the country’s growth target as spelt out in the medium-term plan (MTP) of 7,1% and 10% annual growth required to reach a US$100 billion GDP by 2040 proposed by the Business Council of Zimbabwe and the CEO round Table were not achievable.

“The vision of achievement of a US$100 billion economy by 2040 requires us to grow at a minimum of 10% per annum. The MTP has a minimum target growth of 7,1% until 2015 with the vision of ‘growing and transforming a socially just Economy. The 2013 budget sadly misses both these targets. Zimbabwe therefore needs to take stock and introspect on why it is missing its own targets and hence put corrective measures to avoid our dreams going up in smoke,” said Kenias Mafukidze, Chairman of the CEO Round Table.

“It must be said that on the budget, Honourable Biti made the best of not so great a situation. According to the minister: ‘developments in 2012 were slow and disappointing’. We could not agree with him more. His was a call for us as a country to review our direction, dust ourselves up and become more strategic in our efforts. The current path leads to doom,” Mafukidze warned.

The notable points worrying industry leaders are the particularly high level of consumptive expenditure in the economy by both the public and private sectors.

“In the words of minister Biti, of the US$3,8 billion (budget for 2013), about US$2,6 billion would go towards the employment bill and government would be left with nothing. In addition, imports are unsustainable and as at October, were US$6,5 billion, indicating a 3 to 1 ratio of import to exports,” Mafukidze added.

While the first annual MTP implementation progress report unveiled a fortnight ago stated the GDP growth target was “on track” , Biti’s sobering statistics show the medium-term plan is clearly off track.

Sadly, the MTP also makes a bold statement that total projected revenues of US$3,640 billion will be achieved as total revenues of US$2,291 billion are on track. However, a closer inspection of the outturn to September 2012 as per the Ministry of Finance shows expenditures for the last quarter fell short of the 2012 budget by US$1,214 billion, which is the amount that government needs to collect by year-end if the revised budget is to be met.

Revenue collection experience for 2012 has seen a total of US$2319,4 billion by Zimra in the year to September 30 2012. Revenues have therefore averaged US$774 million per quarter while the demand for the last quarter is more than US$1,214 billion. There is potentially a huge risk that government will not earn the revenue required to sustain the remainder of the 2012 budget.

“Put simply, as a country we cannot expect growth when we are consuming more than we are producing and importing three times more than we are exporting,” Mafukidze said.

The above issues put together are a classic recipe for economic stagnation, he said.