THE Zimbabwe National Chamber of Commerce (ZNCC) has criticised the mid-year budget review for failing to put in place a detailed de-dollarisation framework at a time the market is re-dollarising.
The authorities announced the surprise return of the Zimbabwean dollar in June last year without first ensuring the requisite economic fundamentals were in place. But the mid-year budget review presented last week was silent on providing a comprehensive de-dollarisation framework.
“Budget is silent on the de-dollarisation framework which has not been convincing given that the realities on the market are pointing to re-dollarisation and not de-dollarisation,” the ZNCC said.
Recently, a leaked de-dollarisation strategy from the central bank indicated that the use of the US dollar for domestic transactions would be permitted in the next four years while a fixed and dual exchange system would be adopted. However, the central bank suspended some of its staff members, accusing them of leaking a working document.
The ZNCC further said the revised projection of a 4,5% contraction in the economy in 2020, against the initial budget projection of 3% growth, is unrealistic given that the major drivers of the economy are under pressure as a result of the impact of Covid-19 which has resulted in a decline of economic activity across all sectors.
As a result, the ZNCC says it projects the economy will decline by at least 9% in 2020.International financiers have projected a contraction ranging between 10% and 15%.
The chamber said a budget surplus of around ZW$800 million (US$11,1 million), for the period January to June 2020, which takes into account outstanding payments, is debatable given that the economy has been on a decline characterised by an inflationary environment.
“Absence of a supplementary budget is premised on that the country is running a surplus when in real terms revenue has declined. Quasi fiscal activities by the central bank also mean that expenditure was shifted to the central bank which makes the surplus questionable,” it said.
The chamber also said the mid-term budget review is silent on the closure of the Zimbabwe Stock Exchange and this weighs down on both local and foreign investment. The budget did not mention the impact of the closure of the stock market. It was also silent on the government’s ZW$18 billion (US$250 million) Covid-19 stimulus package.
“The budget did not give a detailed progress update on how much has been disbursed from the stimulus package. Budget only mentions that the resources are already being disbursed to all key areas with wheat farmers being some of the first to benefit,” the ZNCC said.
It said there was need to capacitate the National Competitiveness Commission (NCC) whose function is to continuously monitor the cost drivers in the business and economic environment.