Analysts said yesterday Zimbabweans must brace for higher prices and more hardships in 2008 following what they described as a meaningless, empty and disastrous national budget presented by Finance Minister Samuel Mumbengegwi last Thursday.
University of Zimbabwe business lecturer Anthony Hawkins said the budget was highly inflationary, worsening an already fragile situation where prices of goods and services are rising daily.
This was just an exercise with no meaningful impact on the economy. It was like building castles in the air because some of the targets like the input schemes require foreign exchange which government does not have at the moment, said Hawkins.
He said most of the targets proposed by the minister would soon be overtaken by inflation.
Zimbabwe has the world’s highest inflation, with changes in the cost of goods and services estimated at nearly 15 000 percent in October.
Bulawayo-based economic commentator Eric Bloch described the budget as a mere statement of intent which is devoid of any tangible measures to stimulate the struggling economy.
It was a disastrous budget full of contradictions and which expresses all sorts of positive intents but proposes no real measures to stimulate the economy, Bloch said.
Mumbengegwi presented a $7 800 trillion people’s budget for 2008 dominated by expenditures to boost the rural economy or poor communities, with nothing of substance to revive the productive sector reportedly operating at below a third of its capacity.
Among other things, he allocated $8 trillion for the development of community-based infrastructure projects in rural areas as well as $103 trillion to support farmers for the 2007/08 season that has been dubbed the mother of all agricultural seasons.
An investment banker with a Harare-based commercial bank described Mumbengegwi’s budget as the emptiest financial statement he has ever come across and said Zimbabwe was doomed unless the government changed course away from dolling out funds to non-productive activities.
What is worrisome is that we haven’t seen the end of these reckless patronage programmes, particularly as we head towards elections in the next few months.
The nation must brace for more hardships in coming months as the economy starts to take a knock from the effects of the government’s charitable ventures, said the banker who could not be named for professional reasons.
The Harare authorities have since 2000 relied on a patronage system under which they have dolled huge sums of money in the form of fuel and agricultural inputs to ruling ZANU PF party supporters.
The input schemes failed to produce the intended results and are blamed for the country’s runaway inflation.
The analysts warned that Zimbabwe’s inflation could hit 30 000 percent by March 2008 unless there is a change of course away from populist policies to measures that stimulate economic growth.
The International Monetary Fund projects that the Zimbabwean economy would decline by four percent this year. – ZimOnline
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