This will be Mumbengegwi’s maiden budget presentation since his appointment
to head the finance portfolio in a cabinet reshuffle last February.
He faces the unenviable task of trying to restore long-disappeared
confidence into an economy starved of good news and on an eight-year
tailspin.
Judging by the slide in economic fundamentals during 2007, Mumbengegwi faces
a more daunting task compared to his predecessor Herbert Murerwa.
At the time of the 2007 national budget presentation on 30 November 2006,
Zimbabwe’s annualised inflation was a mere 1 070.2 percent as at October.
Although official figures are yet to come out, inflation is now estimated to
have risen to nearly 15 000 percent by October 2007.
One of the most viable options open to the minister would be to tackle
head-on the contentious issue of the exchange rate and in the process
address supply-side bottlenecks that are blamed for goods shortages and the
country’s rampant inflation.
Zimbabwe has maintained a dual exchange rate regime comprising an overvalued
official rate and a more market-determined parallel market rate.
This has created serious distortions in the economy, resulting in acute
shortages of hard cash to import fuel and power.
The minister also needs to drastically cut government expenditure by
insisting that ministries live within their means and outlawing off-budget
(quasi-fiscal) spending by the central bank.
But analysts yesterday said Mumbengegwi was most likely to ignore the advice
of the technocrats in his ministry and instead pursue an economic path
designed to ensure the political survival of President Robert Mugabe and his
ruling ZANU PF party.
They said he was likely to announce a populist budget to pacify an angry
electorate and entice voters to give ZANU PF and Mugabe a fresh mandate at
the polls next March.
“President Mugabe needs not only to appease his and ZANU PF support base but
also to woo those that crossed the political divide to the opposition which
he has nearly crushed,” said Eldred Masunungure, a professor of political
science at the University of Zimbabwe.
Zimbabweans vote in presidential and parliamentary elections expected in
March 2008.
Masunungure said despite the economic implications of his patronage
politics, Mugabe would not hesitate to dish out his largesse as he had his
eyes firmly on overwhelmingly winning the polls for himself and ZANU PF.
“In addition, we are likely to see even a supplementary budget before the
elections as well as other interventionist (measures) from the central
 bank,” said Masunugure.
Consultant economist John Robertson said, with an election around the
corner, it would be a miracle if Mumbengegwi were to unveil a budget that
would pull the economy out of its current quagmire.
Robertson said like his predecessors at the finance ministry, Mumbengegwi
was well aware of what needed to be done to “right the wrongs in the economy
but all the economic advices are falling on deaf ears.”
“What we are likely to see are policies that are election-oriented that will
further dent the economy long at its knees. I don’t expect much except a
further devastation of the economy,” he said.
It has become a tradition over the years for Mugabe’s government to resort
to raiding the national purse to oil its election machinery.
The analysts said Mugabe would not hesitate even to use the Reserve Bank of
Zimbabwe to print money to fund his party’s campaign.
The Zimbabwe Congress of Trade Unions (ZCTU) said the 2008 budget must
adequately address the plight of workers who have been the biggest
casualties of the economic crisis that started in 1999.
It demanded the linking of the tax-free income threshold to the poverty
datum line presently estimated at over $24.1 million. Workers have in the
past derived some solace from the budget presentations through favourable
adjustments of tax brackets.
A statement from the labour body said the ZCTU was also proposing that the
maximum income tax rate be reduced from the present 47 percent to 30
percent.
The main wing of the opposition Movement for Democratic Change (MDC) said it
did not expect much change from the budget announcement, noting that it
would be another dump squib without any benefits for the economy.
“The current cash shortages are the clearest indicators that the regime is
now comatose and cannot therefore be expected to resolve the crisis facing
the nation,” said MDC spokesman Nelson Chamisa. – ZimOnline
Post published in: News