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Minister of Finance 2007 Budget Statement
Herbert Murerwa, Minister of Finance - Government of Zimbabwe
November 30, 2006

The National Budget Speech was presented by Finance Minister Herbert Murerwa in Parliament on Thursday November 30 2006.

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I. MOTION

1. Mr. Speaker Sir, I move that leave be granted to bring in a Bill to make Provisions in connection with Revenues and Expenditures of the Republic of Zimbabwe and to make Provisions for matters ancillary and incidental to this purpose.

II. INTRODUCTION

2. Firstly, Mr Speaker Sir, I wish to start my Budget speech by acknowledging the valuable support and cooperation that I continue to receive from Parliament in the formulation and implementation of the National Budget.

3. This is consistent with Government's commitment for improving the budgeting process by involving a wider range of stakeholders, including those at grassroots levels. Such involvement guarantees the ownership of the Budget by all stakeholders and is critical for sustaining consensus over the implementation of announced policy measures.

4. It is against this background that my Ministry undertook a nationwide consultative outreach programme aimed at involving the public as much as possible in the Budget formulation process. My Ministry benefited tremendously from the input of stakeholders to which Government attaches great value.

5. The central message from these consultations evolved around the following challenges among others:

  • Ever-increasing prices;
  • Continued distortions in the pricing of key commodities and utilities;
  • Unemployment and rising poverty levels;
  • Foreign exchange shortages;
  • Low industrial capacity utilisation;
  • Underutilised allocated land;
  • Inadequate measures to deal with rising levels of corruption in both the public and private sectors;
  • Deteriorating provision of basic public services;
  • Poor maintenance of infrastructure;
  • Inconsistent policy pronouncements;
  • Declining clarity over the role and accountability of the key institutions of Government;
  • Perceptions of lack of commitment to effectively deal with the challenges facing the economy; and
  • Increasing indiscipline.

6. One of the consequences of the above challenges, Mr Speaker Sir, is the emergence of very large income disparities, with the majority of the lowest paid workers earning below the Poverty Datum Line.

7. The deterioration in the welfare of our people has seen their capacity to access basic healthcare services, education, housing and other amenities collapse overnight, under the prevailing hyper-inflationary environment.

8. This, Honourable Members, is happening at a time when a small proportion of the population is now accumulating wealth overnight, in part benefiting from the price distortions arising from some of the policies and facilities meant to protect the very poor.

9. In this environment, the country continues to experience loss of critical skills, the dominance of the informal sector in the economy, declining capacity utilisation and de-industrialisation. These are some of the challenges that the Budget will have to address with 'head-on'.

10. Regrettably some of the wealth accumulation is a direct product of the prevailing indiscipline in our economy. We have amongst the citizens, individuals benefiting from abuse of public resources and thereby contributing to unnecessary public expenditures and economic hardship.

11. Mr Speaker Sir, we therefore need to declare war against indiscipline, and in this War, the Budget will not be found wanting. We will therefore need to review and strengthen the legislation and penalties for economic crimes.

12. Mr Speaker Sir, Honourable Members will be aware of the partnership with the private sector in the context of the National Economic Development Priority Programme (NEDPP). The thrust of the NEDPP is the implementation of Quick Win programmes and projects, whose objective is to stabilise the economy and lay the foundation for sustained economic growth.

13. The 2007 National Budget will play its critical role of addressing stakeholder concerns, support the NEDPP measures, foster macro-economic stability and restore business confidence.

14. Mr Speaker Sir, it is no secret that the country remains under siege, facing sanctions from the West, characterised by lack of balance of payments support, lines of credit, foreign direct investment and deliberate efforts to undermine our economic turnaround initiatives.

15. This makes it vital that we employ innovative tactics to survive in this environment, taking advantage of our abundant natural resource endowment and reliable cooperating partners.

16. Mr Speaker Sir, the 2007 Budget will be guided by the Results Based Budgeting principles adopted by Government in 2005. Hence, the expenditure allocations for the coming year are related to the anticipated and time-framed deliverables during 2007. I am happy to note that submissions from line Ministries now take the Results Based Budgeting format on board.

17. The setting of specific deliverable targets for the respective line Ministries under the 2007 Budget should also assist to 'turn the tables' on the major inflation drivers under Ministries' domains through active focus on productivity and close monitoring at the Ministry level. In this regard, the Budget will ensure that Ministries focus on their roles and responsibilities in fighting the overall inflation levels.

18. Mr. Speaker Sir, Honourable Members will be aware that the implementation of our Currency Reform exercise on August 1, 2006 resulted in the revaluation of the currency with the removal of three zeros from the old bearer cheques and the introduction of a new set of bearer cheques. Hence, in my presentation, all domestic currency statistics reflect the revalued currency.

19. Mr Speaker Sir, my presentation will cover the fiscal performance up to October 2006 and the estimates to year end. I will also touch on the economic challenges we are facing as a Nation.

20. Mr Speaker Sir, allow me to first of all give a brief overview of the Global Economic Outlook, as well as a review of recent Domestic Economic performance and projections for 2007.

21. My outline of the Fiscal Outturn during 2006, will be followed by the 2007 Expenditure Bids by line Ministries, before I turn to the Thrust and Priorities for the 2007 National Budget, and my Revenue Proposals.

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