2019 national budget Ball in Prof Mthuli Ncube’s court
THE ball is in Finance and Economic Development Minister Professor Mthuli Ncube’s court today as he presents his 2019 national budget policy statement, which is expected to guide the economic transformation process and buttress Government’s vision towards an upper middle-income status by 2030.
Hopes are high that Prof Ncube, guided by the Transitional Stabilisation Programme (TSP) and the wider consultative input from different stakeholders, will deliver the most progressive and balanced fiscal policy statement that will attract fresh investment, re-invigorate productive sectors and rejuvenate Zimbabwe’s economy.
A sound currency reform framework, trimming the fiscal deficit and stabilising skyrocketing prices on the market are viewed largely as the major gaps facing the economy, which Prof Ncube’s budget will have to tackle head on. These and other measures will have to be coined within a thorough and convincing framework or roadmap that addresses wider sectorial needs and aligns Zimbabwe’s growth trajectory to global economic best practice, economists have said.
“We expect tomorrow’s (today) budget to come up with clear currency reforms measures to support on-going economic reforms. Obviously this country is not ready for a local currency but we need a clear currency recovery process,” Bulawayo businessman and economic researcher, Mr Dumisani Sibanda, said.
“Mthuli’s budget has to deal with the $10 billion electronic balances in banks and ringfence them through a Government bond of some sort so that we start afresh and re-dollarise the economy.
“Government created a problem through over-expenditure. Thus, we need a budget that reflects the foreign currency requirements for Government and what we need locally so that our expenditure can be clearly understood.”
Association of Business in Zimbabwe (Abuz) chief executive officer, Mr Victor Nyoni, said Prof Ncube’s budget should sanitise the relationship between the bond note and other currencies in use in Zimbabwe, in particular the US dollar. He said although Treasury insists on a 1:1 ratio between bond and US$, it was not the case on the ground and has been rejected by market forces. Mr Nyoni added the budget needs to support productive sectors in particular and reverse the country’s dependence on imports, which piles pressure on foreign currency requirements.
“We therefore, expect the minister to remove most regulatory bottlenecks in the mining, agriculture and manufacturing sectors. He must come up with methods of increasing investment and productivity in these sectors,” said Mr Nyoni.
“Government must not crowd private sector capital in the mining sector, in particular the diamond industry. Foreign currency retention by the mining sector must be increased beyond the current 55 percent. This will attract more investors and indeed allow the mining companies to embark on expansion projects with potential to increase production.”
Economists have also implored Government and the private sector to seriously walk the talk on the subject of industrial beneficiation and this has to be addressed in the budget. This also includes pronouncement of measures that package Zimbabwe as a lucrative investment destination by improving the ease of doing business. Against tight fiscal space, where recurrent expenditure already consumes over 94 percent of public spending, Prof Ncube is anticipated to announce specific measures and targets designed to cut on public expenditure to avoid fiscal imbalances that have destabilised the economy, but still grow the economy.
Prof Ncube is also set to announce taxation measures to shore up revenue and prudent spending plans while giving Zimbabweans assurances that Government has concrete plans to fix the economy and that it is also willing to take the necessary painful decisions, just as it is asking citizens to. Today’s budget statement is also set to provide Treasury forecasts for revenue collection and GDP growth targets, domestic and external debt clearance. Prof Ncube has already indicated a possibility of up to six percent GDP growth, the fastest projected growth across the world and forecast among only six countries in Africa.