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Minister of Finance - Mid Term Fiscal Policy Review, 2007
September 06, 2007
Presented to House of Assembly Thursday September 06, 2007

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INTRODUCTION

1. Mr Speaker Sir, the objective of this Mid Term Fiscal Policy Review is to update Honourable Members on the performance of the economy and the 2007 National Budget during the first half of the year.

2. I will also be making proposals for a Supplementary Budget to ensure efficient operations of the Government up to the end of the year. This will also allow for provision of additional resources for the completion of a number of capital development projects where progress was being hampered by escalating costs under the prevailing inflationary environment.

3. The Review also offers the opportunity for Government to outline some of the measures necessary to stabilise the economy, in line with the obligations that arise under the Social Contract by the Tripartite Negotiating Forum partners, that is, Government, Business and Labour.

4. I will, therefore, take advantage of this Mid-Term Fiscal Policy Review to propose various interventions drawing from developments during the first half of 2007.

5. As Honourable Members are aware, the Mid-Term Fiscal Policy Review is coming against a background of incessant price increases by most of the business community during the first half of this year.

6. This development had seen the unwarranted adjustment of prices, which in too many cases was on an hourly basis, with devastating effects on the ability of ordinary workers and consumers to plan and access basic goods and services.

7. Ironically, this was taking place soon after the signing of the three Protocols under the Social Contract obligating Labour, Government and Business to work together towards stabilising prices, promoting increased productivity and foreign exchange generation.

8. Attempts to effect 'regime change' by the former colonial powers through the use of prices instability, confirmed the fact that the hourly price adjustments by Business were no longer a market phenomenon for their viability, but rather an instrument towards this political agenda.

9. In response to this 'economic carnage', Government was forced to intervene by instituting price monitoring and stabilisation measures for restoring sanity in the goods and services markets.

10. This saw clampdown on unscrupulous businesses engaged in such unethical behaviour, while at the same time engaging those with genuine commitment to work with Government in addressing the challenges facing our economy.

11. Mr Speaker Sir, now that the price stabilisation exercise has settled in, and that the business community has expressed its willingness to enter into a 'real' Social Contract, it is therefore, time to return to normalcy through the operationalisation of the National Incomes and Pricing Commission. This should contribute towards addressing other challenges facing the economy.

12. Mr Speaker Sir, given the declared and undeclared sanctions on our country by some of the Western countries, the policy imperatives for this Review, the forthcoming 2008 National Budget, and the Monetary Policy Statement will, therefore, strive to support increased economic activity, while at the same time cushioning the vulnerable groups in our society.

13. Mr Speaker Sir, before making proposals on the 2007 Supplementary Budget, allow me to first outline the economic and fiscal developments during the first half of 2007.

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