In his statement on Tuesday, Biti said that he was going to have to make serious cuts to certain government spending, including procurement of vehicles and overseas travel. Robert Mugabe and government ministers have since the beginning of the year reportedly blown about $30 million on foreign trips alone. Biti also stated that the government should fast-track the privatisation of the country’s ailing parastatals, which are affecting the government.
Analysts point out that the main problem facing the Ministry of Finance is a lack of money, running into millions. The government, which had a revenue target of $2.7 billion in the 2011 budget, has already admitted it will not hit this figure, with the International Monetary Fund (which overseas global financial systems) pegging the shortfall at between $350 million to $450million. Faced with pressure to promote economic growth and also restore investor confidence, the Finance Ministry is being hindered by crippling policies championed by Robert Mugabe’s ZANU PF.
A more recent challenge has been the civil servants pay rise, which observers say ZANU PF forced through to score political points against the MDC-T Finance Minister, Tendai Biti. On several occasions Biti explained the country could not afford the pay hike at this stage. Despite reports that it will be funded by money from diamond sales, analysts now say that because has been forced through, it will bleed the Treasury purse. The pay increase reportedly forced the government to fork out $40m, which was not budgeted for.
“The downside is political,” explains economic expert Tony Hawkins, “It’s a big political issue as you know because the ZANU PF element, spearheaded by the president himself, actively pushed hard for a wage increase and Mr Biti, as the MDC Finance Minister, is saying look we haven’t got the money.”
Another economic analyst Masimba Kuchera told SW Radio Africa that the sudden wage increase pay-out will have a knock-on effect, as the government would have hoped to put more money into capital expenditure, such as on roads, schools and airports, but now this has been compromised.
Hawkins also raised the issue that the wage bill from the Ministry of Youth and Indiginisation is allegedly contributing to the general wage overspending problem. These allegations come amid reports that the Youth Ministry’s wage bill was funding ZANU PF’s youth militia.
Analysts also say that the controversial Indigenisation policy is now hitting black businesses that ZANU PF claimed it would boost. The law forces foreign-owned companies to cede more than half of their company shareholding to locals, and is widely blamed for deterring foreign investors from putting their capital in Zimbabwe. This has been described as a huge blow for local business who are baying for foreign help.
Biti is under pressure to provide assistance to this sector, which has seen numerous companies shut down despite talk of economic recovery. The Zimbabwe National Chamber of Commerce recently stressed that businesses needed capital to overhaul antiquated machinery and revamp structures, but this was impossible without foreign investment. And this month, the Confederation of Zimbabwe Industries threatened to resort to public demonstrations if government failed to heed its calls to address issues affecting the viability of local companies.
Post published in: News