THE formality of adopting the new constitution has come and gone, and so has the expenditure associated with it.
Candid Comment with Itai Masuku
But it’s not over yet. To quote an expression, the mother of all expenditures is next; the general elections.
We are told some US$100 million or so is needed for this exercise and everyone is now being taxed to fund it. Businesses are being cajoled into financing the elections. We understand all the three major political parties are going for broke in these elections. These are watershed s and along with them watershed expenditure.
The biggest question is, while all the political parties in the unity government will be busy preparing for the elections, who will be watching the economy?
The very fact that there is intra-party factional fighting within the main political parties means all the energies of the members of the government will be directed towards their political survival.
In politics a week is a very long time, Harold Wilson once said, and the fact that we are not sure whether these elections are going to be held in June, July or September as has been mooted variously, means political uncertainty will evidently translate into economic uncertainty for a long time. As usual, some investors are already adopting a wait-and-see attitude. Others are taking positions ahead of what they think will be a once-in-a lifetime opportunity.
Unfortunately for the populace some within the leadership are on the last chance train for plunder. This is unfolding in the anti-corruption saga unfolding. Where this will end is anybody’s guess but one thing is certain: a “loota” continua before the opportunity goes. We all recall the unity government began on a very sound footing by stemming unchecked expenditure and sticking to a zero-balanced budget.
When Zanu PF appeared determined to hold elections last year, we slipped into deficit spending. Now we are skating.
By the way, the expanded legislature from the new constitution will increase government expenditure.
A question for our unity government is: what economic legacy will it leave behind?
Shall we credit it with restoring the crucial macro-economic fundamental of price stability? Honestly speaking, dollarisation began before the unity government and technically it’s a fallacy to attribute price stability to the GNU. In fact signs are the GNU has overseen the return of inflation, this time in US dollar terms.
Inflation figures released by Zimstat claim February annual inflation was 2,98% or something fantastic like that. Firstly, how do you keep inflation at that level when you have the magnitude of deficit spending we are in? Secondly, how do you attain such a level when the trade balance is hugely against us? A child going to boarding school can justify to you why they need more pocket money.
We don’t know the details of Zimstat’s basket of goods to measure the Consumer Price Index, but what we know is the basket of goods we get from our supermarkets is costing more by each day.
Just by way of illustration in 2009 US$100 could get one a trolley full of goods in most of Zimbabwe’s supermarkets and two trolleys in Messina or Francistown. Now, you’ll be extremely lucky if you can fill half a trolley. The only product that has gone down in price is Schweppes’ Mazoe Orange.