There is no substitute for credibility

FINANCE minister Mthuli Ncube was not his usual ebullient self when he testified before the National Assembly’s budget and finance committee on Wednesday this week.


Prof Ncube was rather subdued, although there was an unmistakeable effort to strike an optimistic tone. It is not difficult to figure out the source of his anxiety. The economy is in terrible shape. It was tattered even before Covid-19 hit the global economy; now there is really no economy worth talking about.

With international commodity prices, tourist receipts and foreign remittances all projected to shrink dramatically on the back of the pandemic this year, it will take a massive leap of faith for anyone to believe that Zimbabwe’s economy can emerge unscathed. It is important to remember that the Finance minister has not yet sought parliamentary authority to amend the national budget. He says he plans to do so in the next few weeks. In a country that purports to be a constitutional democracy, ministers are accountable to citizens through the legislature. A budget cycle consists of four phases — crafting and presentation, authorisation, execution, and audit and evaluation—and all stages must be fulfilled in terms of the law and the principles of public finance management.

The government needs extra sources of funding to augment the 2020 budget. Ncube says ZW$500 million has been mobilised through Treasury Bills (TBs) and another ZW$500 million is envisaged to be raised via pension funds. He did not reveal the finer details, for instance the tenor of the TBs.

Make no mistake, money supply will swell when these instruments mature. The National Assembly’s budget and finance committee needs to critically examine the issue.

The line of questioning during Wednesday’s session was tame and unhelpful for the most part. How will a broke government pay for the TBs at maturity? Unrestrained printing of money would be disastrous, as experience has shown.

The minister told legislators that the government collected revenue totalling ZW$18 billion from January to April this year. Total expenditure was ZW$17,9 billion. He says Treasury registered a “surplus” of ZW$77,6 million in that period. For perspective, the amount he describes as a “surplus” is less than US$2 million.

There is a more worrying problem. When public officials talk about expenditure, they have a tendency to under-report fiscal expenditure. The gold incentive, for example, is unfiscalised expenditure. But again, you have to realise how incompetently Zanu PF has handled the country’s finances in the past 40 years. The whole idea behind quasi-fiscal expenditure is to hide fiscal indiscipline under a false veneer of respectability.

Can Prof Ncube tell Zimbabweans whether the government’s litany of quasi-fiscal expenditures is included in his computation of a wonderful “surplus”?
Economies are built on credibility and confidence.