No go­ing back on aus­ter­ity mea­sures

The Sunday Mail (Zimbabwe) - - NEWS - Kuda Bwititi Chief Re­porter

FI­NANCE and Eco­nomic De­vel­op­ment Min­is­ter Pro­fes­sor Mthuli Ncube, who is 42 days into his new job, says it is only fair to judge him af­ter six months, adding that he ex­pects the ben­e­fits of aus­ter­ity mea­sures to start com­ing through around March 2019.

Eco­nomic struc­tural re­forms, he said, were un­avoid­able.

The Tran­si­tional Sta­bil­i­sa­tion Pro­gramme (TSP) through to De­cem­ber 2020 has se­cured the back­ing of the World Bank Group and IMF.

In an in­ter­view with The Sun­day Mail last week, Prof Ncube said, “I have only been a min­is­ter for one month. We need pa­tience, we know what we are do­ing. What I can say to Zim­bab­weans is that they should give me six months to see the full im­pact of the changes from the poli­cies that we have pur­sued.

“Of course, I need a year to make a for­mal re­port with things such as the Bud­get, but judge me af­ter six months. We would have made very good progress in var­i­ous fronts, both in terms of ar­rears clear­ance agenda and progress on the fis­cal front, deal­ing with the rev­enue front which we have acted on and cut­ting Gov­ern­ment ex­pen­di­ture.”

He said the af­ter­shocks of the new pol­icy mea­sures would not stop the sta­bil­i­sa­tion agenda.

“There is no re­gret. We are not go­ing to do pol­icy re­ver­sals, it’s a very bad idea to re­v­erse pol­icy. We need pol­icy con­sis­tency. All we want is for Zim­bab­weans to un­der­stand what we are try­ing to do. We have a pa­tient that is bleed­ing, th­ese poli­cies are the so­lu­tion, they are not the prob­lem,” he said.

“We will run some num­bers on how we will do cost-cut­ting on a monthly ba­sis. We will run some num­bers on a monthly ba­sis on the ex­pen­di­ture. This means af­ter one year, I will be able to re­port for­mally on where we are. That is why I am say­ing, if you give me six months, you will see changes, sig­nif­i­cant changes.”

Trea­sury will cut the civil ser­vice wage bill, which stands at $300 mil­lion per month, by $60 mil­lion.

Added Prof Ncube: “I am con­fi­dent that we will make a lot of progress, you will see the mea­sures in our Bud­get, and (the) ten­ta­tive date is 22 Novem­ber.

“Gov­ern­ment wages are about $300 mil­lion a month, so if we are re­duc­ing that from 70 to 50 per­cent (of ex­pen­di­ture), so we will save about $50 mil­lion to $60 mil­lion, which over time is what we would want to save on a monthly ba­sis. This is the tra­jec­tory over the next three years.

“I can’t say whether (bonuses of civil ser­vants) will be there or not, but it is an is­sue that we are look­ing at. We will con­sult with the Pres­i­dent and other stake­hold­ers, but in this Bud­get, we will show that we are se­ri­ous about cut­ting ex­pen­di­ture.”

Prof Ncube said by broad­en­ing the tax base through the new two per­cent trans­ac­tional tax and pre­sent­ing a cred­i­ble TSP, Gov­ern­ment had com­pleted part one one of the three-stage process of clear­ing ar­rears to in­ter­na­tional fi­nance in­sti­tu­tions.

“The plan ba­si­cally has three stages: the first stage is to pro­duce and present a cred­i­ble re­form pro­gramme, I have done that through the TSP.

“I have pre­sented the doc­u­ment to the part­ners - IMF, World Bank and the African De­vel­op­ment Bank, the IFIs, as well as the Paris Club. It was well re­ceived, al­most with­out ex­cep­tion. They chal­lenged me to walk the talk and en­sure that the im­ple­men­ta­tion hap­pens. I then told them that im­ple­men­ta­tion had al­ready started through the tax.

“The sec­ond phase is we are de­sirous to make an of­fer to pay the AfDB. The pari passu rule says that we should pay them and WB at the same time, but we are pleased to re­alise that there has been an agree­ment to al­low for some flex­i­bil­ity on that.

‘‘I am re­ally con­fi­dent that by next year we would have done that.

“The World Bank fig­ure of $1,3 bil­lion is large com­pared to the $680 mil­lion for AfDB, so for that one we will be seek­ing sup­port from one or two coun­tries, or even all the G7 na­tions. We need to do that and we are go­ing to make a re­quest.

“The AfDB amount is cov­ered un­der what we call Pil­lar 2 re­sources. Of course, we have to top-up but that is man­age­able. The real is­sue is the World Bank portion.

“Then (stage) three is the Paris Club bi­lat­eral ne­go­ti­a­tion. Once we make an of­fer to clear off the AfDB ar­rears, we will then also kick-start the Paris Club ne­go­ti­a­tions and have con­ver­sa­tions in a se­ri­ous way.”

A meet­ing to that end has been sched­uled for Novem­ber 14 in Liv­ing­stone, Zam­bia; while Zim­babwe con­tin­ues to en­gage the United States on eco­nomic sanc­tions.

The fi­nance chief also said it was crit­i­cal to have the right man­age­ment at the Zim­babwe Rev­enue Au­thor­ity and a new board would be ap­pointed soon.

It has since emerged that Gov­ern­ment is con­sid­er­ing us­ing some of the money raised from pri­vati­sa­tion of State-owned en­ter­prises to com­pen­sate pen­sion­ers who lost money dur­ing the hy­per­in­fla­tion­ary era.

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