FINANCE minister Patrick Chinamasa yesterday presented a US$5 billion budget promising a raft of reforms and austerity measures which he hopes will drive recovery and growth as he charts a path towards a “new economic order”.
Chinamasa said the economy was struggling as shown by low production and export levels, as well as unemployment, and macro-economic instability. It is also reeling from company closures, job losses, a chronic liquidity crunch and cash shortages.
The minister then came up with a series of reforms and austerity measures which he said could lead to a 4,5% growth in 2018. He said government will adopt a major policy shift to re-engage with the international community, international financial institutions and attract investors.
Damaging policies like the indigenisation will be overhauled to improve the business climate and operating environment. The ease of doing business and initiatives like the special economic zones will be improved, among other things.
Government will also deal with vehicles issued to officials, fuel, foreign trips and business travel, the number of embassies and size of diplomatic missions, sub-contracting and tenders, among many other things. It also cut the wage bill, reduce spending and rebalance is fiscal position. The current fiscal crisis is unsustainable. The huge budget deficit and debt must also be addressed.
Apart from that, it will deal investment policies, laws and agreements, as well as sort out land tenure, security and compensation issues.
Chinamasa he his new economic order would restore discipline, foster a stronger culture of implementation, supported by political will in dealing with the following: Correcting the fiscal imbalances and financial sector vulnerabilities; public enterprises and local authorities reform; improving the unconducive investment environment; dealing with corruption in the economy; re-engagement with the international community; stimulating production, and exporting; as well as creation of jobs.
With re-engagement is still stalled, access to external financing is limited, and the fiscal deficit is being financed by domestic borrowing through Treasury Bills and bonds at an unsustainable pace.
Chinamasa wants to deal with all these issues through his reform and austerity measures template. This is what we have been consistently saying for some years now.
However, what is needed the most now beyond Chinamasa’s pronouncements and promises is political will; the ultimate driving force to achieve desired results. Political will is also an essential tool to fight mismanagement and corruption. It is the driver of a growing private sector, vigilant media, vibrant civil society, independent judiciary, progressive reforms and sustainable good governance. The woeful failure of previous reform agendas was largely due to lack of leadership and political will.