Zimbabwe budget: Finance minister warns elections will slow growth to 5 percent in 2013
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By Associated Press, Updated: Friday, November 16, 3:56 AM
HARARE, Zimbabwe — Zimbabwe’s finance minister forecasts a slower economic
growth rate caused by political tensions as the nation prepares for
elections next year.
Finance Minister Tendai Biti said when presenting the national budget to
parliament Thursday that Zimbabweans must brace for a “gnashing of teeth” as
economic growth forecast at 9.8 percent for 2012 will decline to 5 percent
in 2013.
Biti allocated $3.8 billion to government spending with more than half going
to civil servants’ salaries.
He warned against violence in the upcoming elections that could lead to a
collapse of the “economic foundation” achieved by the four-year-old
coalition between Zimbabwe President Robert Mugabe’s ZANU-PF and the
Movement for Democratic Change. He said political uncertainty has scared
away foreign direct investment.
Biti is a former opposition politician in the coalition.
Biti: Zim Economic Outlook Bleak
Harare, November 15 2012 – Zimbabwe’s minister of finance Tendai Biti has
set the country’s 2013 budget at $3.8bn, up from the revised $3.5bn in 2012.
Of the amount, $2.6bn will go towards civil servants’ wages, leaving very
little and not enough” to aid development.
Presenting his 2013 budget on Thursday afternoon, Biti said 2013 looks bleak
as the country battles with global recession, financial instability and a
poor business climate.
Biti said the 2013 budget is demand driven, with people calling on
government to address issues with regards to the country’s political and
economic environment.
He also revised 2012 gross domestic product (GDP) growth rates further
downwards to 4.4%, from his earlier revision to 5.6% from 9.4%. In 2013 GDP
is expected to grow by 5%.
“We need to come up with policies and new reform measures that stimulate
growth and follow them if economic growth is to improve,” said Biti.
Biti said the budget’s success hinged on rainfall patterns, but the biggest
risk was a violent election similar to what transpired in 2008
“If that happens it will be a case of making two steps forward and 20 steps
backwards,” said Biti, who said the budget, was the last under the
Government of National Unity.
Biti said growth momentum will be underpinned by expansion in finance,
mining, tourism, agriculture, manufacturing and transport sectors.
The Finance minister said imports remained very high for a small economy
like that of Zimbabwe.
Biti also made provisions for the country’s referendum, and elections
scheduled next year.
He further emphasised the need for political stability in the country saying
the absence of the rule of law puts a damper of the country’s prospects of
realising total economic growth.
Budget Highlights:
• Bonus tax free US$1000
• No banks charges if bank balance is US$800 and below.
• Life expectancy now 41 years
• 150 million kg of tobacco is targeted.
• 17 000 metric tonnes of wheat expected from 100 000 metric tones
• Mining industry capable of raising US$14 billion dollars annually.
• Police road block too much in Zimbabwe and the issue need to be
urgently reviewed
• Loan to deposit ratio at 75 percent
• Roads need attention
• Workers over-taxed
• Civil servant salary to be reviewed in line with inflation.
• Government to promote E-tourism.
• 20 million dollar line of credit to SMEs
News 24/Radio VOP
Tough choices as Biti presents 2013 budget
14/11/2012 00:00:00
by Gilbert Nyambabvu
FINANCE Minister Tendai Biti presents his 2013 national budget Thursday
under pressure to fire-up a stagnating economy as well as find money for
elections and other pressing expenditure demands on an increasingly sparse
government purse.
If it’s any comfort however, the treasury chief will address a nation
decidedly low on expectations when he makes his stand before Parliament.
His 2012 budget went off the rails midway through the year while the
economic recovery of the last few years has suddenly hit the skids.
Key economic sectors such as industry underperfromed, hamstrung by a myriad
of problems, among them the lack of capital as local financiers either
lacked the capacity or just couldn’t be bothered and external credit lines
proved impossible to secure.
Agricultural output also took a huge hit from inclement weather conditions
with the World Food Programme (WFP) estimating that some 1.6 million people
would need food aid between now and the next harvest.
As such, not many were surprised when Biti was, last week, forced to concede
that GDP growth would be nowhere near his initial 9.4 percent forecast
saying: “New information shows that the growth rate of 5.6 percent earlier
announced in the mid-May review will likely be revised downwards to around
4.0 percent.
Revenue projections for the year were also pegged back to US$3.6 billion
from about US$4 billion with the minister announcing that the government was
staring at a US$400 million budget black hole in the period leading to the
end of the year.
Tourism and mining were among the few bright spots with the latter expected
to grow by 16.7 percent, up from the initial forecast of 15.9 percent
although productivity continues to be affected by unreliable power supplies
and unending liquidity problems in the economy.
Company closures
Industry and other productive sectors however, remain in desperate need of
capital to boost capacity utilisation. Confederation of Zimbabwe Industries
president Kumbirai Katsande said companies were struggling to stay afloat in
an increasingly difficult operating environment.
“We see it in these companies folding up, declining capacity utilisation and
declining employment levels. You just have to talk to NSSA, they will tell
you how many companies are winding up,” Katsande said Wednesday.
But the CZI chief and his colleagues will know that there is little prospect
of relief from Biti.
The minister will, again, be forced to commit most resources to recurrent
expenditure with the state wage bill alone accounting for more than 60
percent of government revenues.
He has also pledged to pay bonuses to state workers this year but a proposal
to offer them inflation-linked wage increases in 2013 drew fire from the
estimated 260,000 civil servants who spent most of this year sniping at the
government for a near-doubling of their current salaries.
Even so, civil service salaries may not be the most immediate of Biti’s
worries. More significant are matters political; in particular the $219
million tab for a constitutional referendum and fresh elections expected to
be held in March.
According to the Zimbabwe Electoral Commission, the referendum, which
President Robert Mugabe says should be held this year, will set the country
back a hefty $104-million, while the elections will require about
$115-million.
Election finance
Biti has since warned Cabinet colleagues that there was no money for the
referendum and the new polls and proposed that the country must look to
foreign donors for assistance or consider deferring both processes
altogether.
The suggestion was emphatically shot down by Zanu PF, with politburo member,
Jonathan Moyo, insisting that: “Zimbabwe is not in the pockets of donors.
The money for elections is there. We are going to have the elections once
the President proclaims the dates.”
Justice Minister Patrick Chinamasa also said Wednesday that Biti had to
“ensure an adequate budget for the holding of harmonised elections next
year”.
Zanu PF insists new elections must be held to end what it now describes as
an unworkable coalition arrangement with the MDC formations, blaming
unending disputes and disagreements on policy and other differences.
Forced on the parties by the regional SADC grouping after violent but
inconclusive elections in 2008, the unity government was expected to help
ease political tensions in the country and put the economy on a path to
recovery and growth after a decade-long recession.
Once the political and econmic situation had stabilised and a reforms
implemented to help ensure an indisputable election, new polls would then be
held to elect a substantive government.
Political tensions have since eased significantly despite fears of renewed
clashes as campaining begins for the March elections.
But, on the economic front however, the coalition administration has little
to show for its three years in office.
The decision to ditch the Zimbabwe dollar for much more stable foreign
currencies helped put a stop to world record inflation.
Zanu PF however claims credit saying Chinamasa introduced the measure as
acting Finance Minister before the coalition government assumed office.
Again, while the economy has recorded consistent, if marginal, recovery and
growth since 2009, this has not translated into new jobs and unemployment
remains very high with the large majority of Zimbabweans still struggling to
put a meal on the table.