Commercial Farmers' Union of Zimbabwe

Commercial Farmers' Union of Zimbabwe

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Zimbabwe Finance Minister warns of govt shutdown over deficit

Zimbabwe Finance Minister warns of govt shutdown over deficit

Thursday, 28 July 2011 16:17

Zimbabwe’s Finance Minister Tendai Biti has warned of a “long winter of 
despair” saying there is a real danger of government shutting down 
completely down as early as October.

Biti made the warning on Tuesday as he presented his midterm fiscal policy 
statement that showed the country’s budget deficit hitting US$700 million 
this year, largely because of an unbudgeted salary increment for government 

The statement delivered in parliament policy was a reality check for 
Zimbabweans who were becoming optimistic about the country’s economic 
recovery and future prospects.

“Zimbabweans must brace themselves up for a long winter of despair,” Biti 

“We have made this bed and we must lie in it. Zimbabwe is facing an 
unsustainable US$7, 15 billion debts.”

Although macroeconomic fundamentals remained stable and the 9,3 growth 
projection for this year was still on track, unbudgeted expenditures seem to 
have complicated matters for Biti.

The recent public servants’ salary increases, which would require an 
additional US$262 million, and other unbudgeted expenditures amounting to 
$500m would put a further strain on the $2, 7 billion budget for this year.

State wages would now take up 65% of revenue, something the International 
Monetary Fund warned against in April.

But the minister remained optimistic that the economy will continue with its 
positive growth that began in 2009 when President Robert Mugabe formed a 
unity government with his former opponents.

“Agriculture and mining, with 19, 3% and 44% growth respectively, are at the 
epicenter of this growth,” he said.

“The real problem is not in 2011, it is in 2012 because we are going to 
start off with a budget of US$2 billion and US$1,1 billion on anything 
else,” he said.

“The real gnashing of teeth will be in 2012 and you must brace for a long 
winter of despondency,” Biti said.

“More importantly, there is said a real danger of government running 
completely down as early as October 2011.

“We are likely to run monthly cash deficits and we shall face difficulties 
in covering obligatory expenditure commitments.”

But the minister unveiled a cocktail of measures aimed at protecting local 
industry from cheap imports.

Import duty on some food stuffs ranging between 10 percent and 25 percent 
was restored.


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