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The 2011 mid-year fiscal policy review
Tendai Biti, Minister of Finance - Government of Zimbabwe
July 25, 2011

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http://www.zimtreasury.org/budget.cfm

Introduction

1. Mr Speaker Sir, Section 7 of the Public Finance Management Act [Chapter 22:19], reads as follows:

(1) It shall be the duty of the Minister: . a. To develop and implement a macro-economic and fiscal policy for Zimbabwe and he or she shall, for that purpose: . i. Supervise and monitor the finances of Zimbabwe; and ii. Coordinate international and inter-governmental financial and fiscal relations.

(2) For the purposes of the full discharge of the duties set out in subsection (1), the Minister shall ensure that:. a. full and transparent accounts are from time to time and not less than annually made to Parliament indicating the current and projected state of the economy, the public resources of Zimbabwe and the fiscal policy of the Government.

2. Consistent with Section 7 (2)(a) above, and with precedent, I hereby present the 2011 Mid Year Fiscal Policy Review, which seeks to give progress on this year.s fiscal and economic developments to June and the outlook to December 2011.

3. Mr Speaker Sir, the present Review is being made two years and 160 days into the life of the Inclusive Government that was ushered in by the Global Political Agreement (GPA), executed on 15 September 2008.

4. The GPA, in Article IV, committed itself to restoring macro-economic stability in the country, and in reviewing the performance of the first half of 2011, it is only fair to consider whether or not the Government has remained loyal to the dictates and imperator of Article IV of the GPA.

5. Mr Speaker Sir, allow me also at this juncture to acknowledge the launch of the Medium Term Plan (MTP) by Government on 7 July 2011. This will be an essential tool and campus in navigating the stormy waters of Zimbabwe.s growth and recovery from 2011 . 2015.

6. Mr Speaker Sir, let me also from the onset indicate that, this year's Mid Year Fiscal Policy Review, marks a shift from previous reviews, which under the then unstable macro-economic environment took the mode of mini mid-year Budgets.

7. This follows the positive economic developments since 2009, which now anchor the prevailing stable macro-economic environment. We now have opportunity to revert back to embracing processes rooted to sustain the integrity of a 12 monthly planning and implementation cycle for the Budget.

8. Therefore, Mr Speaker Sir, this Review is not a Supplementary Budget but a sobering account on the current challenged state of our economy, with interventions that are necessary to ensure that we keep afloat for the remainder of the year.

9. Furthermore, to improve effectiveness and efficiency in budgetary processes, budget formulation will now take a three year planning horizon.

10. Consistent with this, Government is introducing the concept of a Budget Strategy Paper (BSP) as a prelude to the actual Budget. This will outline the broad budget policy framework for the medium term. Hence, the initial BSP will cover the period 2012 - 2014 and will be anchored on STERP and the Medium Term Plan.

11. Accordingly, the BSP is a tool meant to facilitate broader participation and in-depth debate on the national priority issues. This approach, unlike in previous years, allows more time for stakeholder participation during the consultative and formulation phases of the budget and, hence, enriching the budgeting system.

12. Mr Speaker Sir, I propose to launch our first Budget Strategy Paper for the coming year during early August, in this August House for debate by Parliament and by a wider range of our stakeholders once this has gone through Cabinet.

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