HomeBusiness DigestChinamasa treated as the fall guy

Chinamasa treated as the fall guy

Smarting from last year’s spat with Indigenisation minister Patrick Zhuwao over changes on a law compelling foreign investors to dispose controlling equity stakes to locals, Finance minister Patrick Chinamasa will again remember 2016 as the year he became the fall guy who got a slap down from President Robert Mugabe when the economy imploded.

By Bernard Mpofu

Finance Minister Patrick Chinamasa
Finance Minister Patrick Chinamasa

Chinamasa said Zimbabwe’s economy will grow by a modest 0,6% in 2016 — his lowest since taking over as finance chief in 2013 — from an initial projection of 1,2% driven by improved agriculture and mining output.

In any progressive economy, the brickbats he received from his own party, Zanu PF, and critics would have warranted his resignation.

In the same year, disgruntled civil servants picketed at his offices over salary delays and demands for a salary hike.

So broke is Treasury that the bulk of civil servants will not have salaries to merry-make during the festive season this year.

A sit-in in June over salary delays almost paralysed government business and for Mugabe not committing to pay bonuses was politically wrong. Either way, government is still in a Catch-22 situation.

Chinamasa was this year thrown under the bus by his principal — Mugabe — when he announced during the Mid-Year Fiscal Policy Review in September that Treasury would not pay public service bonuses and push for public sector layoffs this year citing limited fiscal space. With the public sector wage bill accounting for 96% of total revenue, it made economic sense for Treasury to suspend the payment of the 13th cheque.

Chinamasa’s rejected proposals sought to rationalise the civil service size of the work force to 273 000 from the current 298,000, yielding annual savings of US$155 million, while the bonus suspension will save an additional US$18 million.

Zimbabwe finances its budget entirely through taxes as international money lenders stay away over its failure to service debts. It owes foreign debtors US$7,5 billion; 80% of that in arrears.

During the same year, Treasury failed to pay civil servants’ salaries and payouts for pensioners on time on many occasions.

Barely a week after presenting the mid-term policy and while Mugabe was away on business, Information minister Chris Mushohwe left egg on Chinamasa’s face when he said his decision had no cabinet blessings, notwithstanding the economic sense.

It wasn’t a case of once bitten, twice shy for Chinamasa although this seemed like some déjà vu. After making a similar announcement last year, Mugabe whipped Chinamasa into line when he told multitudes attending Independence Day celebrations that government would stick to its tradition of paying bonuses notwithstanding the weakening economy.

While it appeared like a tough year for the finance minister, 2016 had a silver lining when government paid US$110 million arrears to the International Monetary Fund using its Special Drawing Rights Holdings.

After missing the June deadline to pay off the US$1,8 billion arrears to preferred international financial institutions—IMF, World Bank and the African Development Bank, the IMF commitment was then symbolic on many fronts.

Firstly, it was a step towards reengagement after nearly two decades. Secondly, it showed government’s commitment to reforms although the latter remains a pipe dream.

Now, the real hurdle lies ahead. Treasury needs US$1,2 billion to clear AfDB and World Bank arrears. While government has spelt out a plan to clear such humongous arrears — which represent nearly a quarter of the national budget—mountains have to be moved to implement a raft of reforms that come with the funding. And, that is a herculean task for Chinamasa.

The third quarter of the year also saw Chinamasa making a howler of the year. Amid public resentment and a handful of court challenges over the legality of bond notes, Chinamasa shocked the market when he announced that counterfeit notes of the surrogate currency were already in circulation way before their November 28 launch. This unnerved the markets prompting Reserve Bank of Zimbabwe governor John Mangudya to spring to the defence of his bond notes project.

With just two weeks before 2016 shuts down, Chinamasa is now heading for a collision course with business and energy consumers after proposing a tariff hike to fund most ill-gotten multi-million dollar energy projects.

Evidence abounds of underhand dealings in awarding contracts to not only incompetent bidders but through an inflated cost structures whose burden is borne by the taxpayer.

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