CHOMBO PREACHES FISCAL DISCIPLINE Budget deficit could rise to $1,8bn: Chombo SEZs need sound investment system: Mudenda
FINANCE and Economic Development Minister Dr Ignatius Chombo says the 2017 national budget deficit could rise to $1.82 billion from $400 million largely driven by the cumulative expenditures that are set to close the year at $5.6 billion.
Speaking yesterday during the 2018 Parliamentary pre-budget seminar underway here, Dr Chombo stressed the need for fiscal discipline saying the budget deficit was largely financed through Treasury Bills and recourse to overdraft at the Reserve Bank of Zimbabwe.
“In the outlook to December, cumulative expenditures are projected to reach $5.582 billion, up from the budgeted $4.1 billion,” he told delegates.
“This would raise the budget deficit for the full year from $400 million to $1.82 billion.”
The Minister said the increase in budget deficit was not sustainable and undesirable. Despite the envisaged increase in Zimbabwe’s budget deficit by year end, he said 2018 overall economic growth was expected to average three percent supported by agriculture, mining, construction, tourism and Communication Technology.
“Inflationary pressures, however, threaten to increase to about 2.5 percent in 2018,” he said.
In line with Gross Domestic Product (GDP) growth, exports were expected to increase to $4.6 billion and imports to $7 billion.
Dr Chombo said revenues were projected at $4 billion comprising tax revenue amounting to $3.763 billion and Retention Funds expected to raise $293 million.
“As part of strengthening accountability and transparency over public resources, Treasury from the 2018 Budget, will require that all Revenue Retention Funds are appropriated by Parliament, and accounted for through the Public Financial Management System (PFMS) and integrated into the Budget documentation,” he said.
The 2018 national budget, Dr Chombo added, would strengthen fiscal discipline and improve the credibility of the fiscal statement through adherence to anchors such as limiting borrowing from the RBZ as well as reducing Government debt to GDP ratio. — @ okazunga. Information THE 2018 fiscal policy statement should provide a sound investment framework to ensure the success of Special Economic Zones (SEZs) and mobilisation of domestic resources to foster economic growth.
The Speaker of Parliament, Advocate Jacob Mudenda, said this yesterday while officially opening the Parliamentary pre-budget seminar for legislators and Cabinet ministers here.
“Your submissions today should enunciate the need for a well-grounded economic investment framework that is predicated on the Special Economic Zones (SEZs) whose enabling legislation has been passed by Parliament,” said Adv Mudenda.
“Parliament has to exercise intense oversight in order to ensure that the proposed SEZs are not white elephants but a sound bedrock for local resource mobilisation emanating from accelerated investment therein.”
Adv Mudenda said the gathering should come up with local resource mobilisation strategies to guarantee Gross Domestic Product (GDP) growth in 2018 and the narrowing of the budget deficit to four percent. He said the 2018 fiscal year would be under immense spotlight as it was the final year in the implementation of ZimAsset.
“As we take stock of the achievements made and challenges we have encountered, our people are expecting more localised solutions and interventions in order to consolidate the gains arising from the implementation of Zim-Asset,” said Adv Mudenda.
He also said the upcoming budget statement should address the debilitating issues of procrastination, indolence and inertia that has slowly become endemic and proving to be the biggest enemy in Zimbabwe’s bureaucracy apart from the scourge of corruption.
“The question is, more than a decade down the line, where is the One Stop Investment Centre? Where is the Minerals Exploration Bill which will enable the country to precisely know the worth of our vast mineral resources underground that could underpin a profound growth of our Sovereign Wealth Fund?
“Where is the evidence-based informal sector formalisation policy, which ought to encourage its growth and development?
Where is the revised Indigenisation and Economic Empowerment Act reconfigured in line with the Presidential Policy Directive of 14th April 2016? We must kill the vices of procrastination, indolence and inertia if we are to positively respond to the questions I have just posed,” said Adv Mudenda.
He, however, said the upcoming fiscal policy statement presents an opportunity for a prudent and targeted response to the well documented socioeconomic challenges facing the country.
The Speaker also spoke about the delinquencies of misplaced lending, narrow composition of exports, large quantities of money tied up in Real Time Gross Settlements balances and securities, and dwindling foreign assets among others.
The gathering also noted with concern that Zimbabwe was receiving little Foreign Direct Investment (FDI) of around $300 million compared to other regional countries such as Mozambique and Zambia, which have been attracting in excess of $3billion and nearly $2 billion respectively since 2011.
“Against this background, our continued focus on domestic resource mobilisation thus remains relevant and timely since we are experiencing inadequate foreign direct investments. Parliament, working very closely with the executive, should come up with strategic policy and legal framework paradigm shifts attractive to foreign direct investors, albeit not ignoring domestic investments,” said Adv Mudenda.
He called on the legislators to marshal innovative and creative ideas to enable Zimbabwe to affirm its resourcefulness. Therefore, he said, it was imperative that the country’s policies and strategies be aligned to canvassing for a robust budget in the context of limited resources.
The conference acknowledged the immense contribution and assistance received from co-operating partners who continue to assist Government through technical and financial assistance. — @okazunga.
Dr Ignatius Chombo