AFTER Finance minister Patrick Chinamasa presented his first national budget last November, we warned in our opinion-editorials pages and different platforms that the new minister must watch out for pitfalls ahead.
Zimbabwe Independent Editorial
For it was clear that the economy was on a slippery slope after going through a difficult and costly election transition period, while the rebound experienced since 2009 was coming to an end.
Hence why we are where we are. The liquidity crunch is stinging, our current account deficit is widening and our external position is vulnerable.
We are faced with an overvalued exchange rate and low international reserves. The baseline scenario shows sluggish growth in 2014 and in the medium term, with downside risks in the short term.
Due to company closures and unemployment, the outlook is bleak. Critical risks include dwindling tax revenue collections, policy slippages, financial sector vulnerabilities and global commodity prices.
Zimbabwe is facing these risks with very thin buffers.
However, when Chinamasa came in after elections, he hit the ground running meeting key private sector stakeholders where he presented a forward-looking, albeit simplistic prognosis, of what he would do to ensure economic recovery.
An optimistic thread ran through his budget presentation in which he forecasted strong growth of about 6,1%, premised on ZimAsset “anchored on strong recovery of agriculture and improved performance of mining and construction sectors”.
The minister projected a 9% growth for agriculture, driven by growth in crops including maize, cotton, soya beans and groundnuts.
He forecast 11,4% growth in mining on the back of planned investments and largely fuelled by strong performance in gold, diamonds, nickel and coal.
But now Chinamasa’s speculative optimism is evaporating in the sweltering heat of economic failure, company closures, unemployment, a shrinking revenue collection base and choking debt.
So he has gone back to the private sector begging them to assist with ideas and models to rescue the economy. At the Institute of Chartered Accountants of Zimbabwe winter school in Victoria Falls last month, he invited experts to bring concept papers because “you have strong links with foreign investors who have capital which we do not have here”.
Chinamasa even spoke about policy consistencies, especially regarding indigenisation which is scaring away investors.
The minister appears to have clarity of thought on what needs to be done but unfortunately he represents an arrogant but incompetent political class which does not want to take advice because it thinks it is omniscient and infallible, yet always ducks responsibility.
The private sector, which the minister wants to rope in, has for years warned about the perils of policy inconsistencies and bulldozing indigenisation, while trampling on property rights and creating a hostile investment climate.
Chinamasa and fellow policymakers — who have impoverished the nation — indeed need help because it is clear they are driving the economy towards a precipice, but for them to be helped out, they must first show they are willing to listen to progressive advice, and not behave like a bull in a China shop.