THE dramatic reversal of Finance minister Patrick Chinamasa’s austerity measures contained in his fiscal policy review statement presented to parliament last week underscored what is now a public secret: that the current government has become hopelessly and irredeemably dysfunctional.
Editor’s Memo,Dumisani Muleya
Faced with a deepening fiscal crisis, Chinamasa last week announced that he will embark on a series of drastic cost-cutting measures to rationalise government’s unsustainable wage bill now gobbling an alarming 96,8% of total revenues.
The cost-containment interventions were to include slashing salaries and allowances of cabinet ministers and other senior government officials, reducing civil servants’ wages and perks, reviewing their conditions of service, including cars, fuel and airtime, taxing allowances, closing embassies and revisiting diplomatic staff’s benefits, limiting foreign travel, foregoing bonuses and revising public enterprises, state entities and local authorities’ remuneration framework, among other things.
Government was also expected to carry out massive retrenchments to downsize the bloated civil service from 298 000 to 273 000 employees to reduce the wage bill to 75% of revenues by 2017.
Given rampant budget overruns, Chinamasa had warned government would record a huge budget deficit of US$1 billion by the end of the year instead of the projected US$150 million, highlighting financial indiscipline and profligacy in government. Already by June the budget deficit was US$623 million; a US$473 million variance.
“Failure to contain the budget deficit will worsen the situation to a year-end level of over US$1 billion,” he said.
“The budget deficit is being financed by way of borrowing primarily through issuance of Treasury Bills. This is crowding out credit to the private sector, thereby stifling new domestic investment and growth.”
However, cabinet on Monday stopped Chinamasa dead in his tracks as it angrily threw out his austerity measures.
This plunged the whole reform agenda into disarray against a backdrop of a clash between adherents of populist political grandstanding and pragmatic economic schematics in the deeply divided government now crippled by deadly internal power struggles.
Demagoguery designed to grab votes in 2018 trumped pragmatism calculated to seize power before that, underlining raging factionalism and succession battles.
This also provided clear evidence that the fossilised President Robert Mugabe regime — which has failed to adopt meaningful political, institutional and economic reforms — is badly dysfunctional in leadership and governance terms. Its toxic policies have been catastrophic and delivery capacity disabled.
In the process, Chinamasa’s humiliation — which has happened before with the bonuses mess — could well have driven the final nail in the Lima Plan’s coffin.
The re-engagement process, together with the concomitant US$2 billion fresh funding and Britain’s Zimbabwe transition plan anchored on Vice-President Emmerson Mnangagwa’s ascendancy, was also thrown into turmoil.
The IMF had already sensed the danger and apparently abandoned its mission to Harare last week under heavy pressure from various quarters. This means the Lima Plan won’t be discussed at the Bretton Woods institutions’ annual meetings from October 3-9. Beyond that it leaves Zimbabwe facing a gloomy future in the short to medium-term. Things will only change whenever Mugabe goes, depending on when and how that happens, and what follows thereafter.
In brief, political support for reform has been partial, inconsistent and largely tepid, underscoring the reality that the imperatives of Zanu PF’s political hegemony and self-preservation, inevitability of Mugabe’s departure and attendant power struggles over succession, fundamentally stifle prospects for re-engagement, reform and change.
Whatever happens to the Lima process, Zimbabwe needs immediate and profound reforms to address shocks and vulnerabilities devastatingly coming to the fore.
While government claims commitment to the re-engagement process and reform agenda, which their promoters say will underwrite Zimbabwe’s recovery, it also faces an increasingly uncertain future, buffeted by a host of internal and external pressures. At this rate Zimbabwe appears on course for yet another disputed election in 2018 unless political upheavals collapse the regime before that.
With government’s re-engagement process inconsistent, incoherent and disjointed, the country faces a broken and funereal future before things can get better.