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The National Budget Speech was presented by Finance Minister Patrick Chinamasa in Parliament on Thursday December 19, 2013.
1. Mr Speaker Sir, in terms of Chapter 17, Section 305(1-2) of the New Constitution of Zimbabwe, read together with Section 28(1)(a) of the Public Finance Management Act Chapter 22:19, I move that leave be granted to present a Statement of the Estimated Revenues and Expenditures of the Republic of Zimbabwe for the 2014 Financial Year and to make Provisions for matters ancillary and incidental to this purpose.
2. Mr Speaker Sir, the watershed 31 July 2013 harmonised general elections are now behind us, with the new ZANU PF Government in place.
3. As is typical of any election year, economic agents had prior to elections adopted a ‘wait and see’ attitude, with the last few months before the elections witnessing an intensified liquidity squeeze in the economy, leading to weak aggregate demand.
4. This also had the effect of slowing down economic activity, with 2013 GDP growth now estimated at 3.4%, down from the earlier 5% projection. Growth was 10.6% in 2012.
5. This situation has resulted in an increasingly difficult operating environment for both Government and the private sector.
6. While it is normal for economies that emerge from hyper-inflation to experience a few years of strong growth as the “low hanging fruits” are harvested, i.e. a period of fast growth followed by a slowdown, it is quite evident, Mr Speaker Sir, that we need to put in place Confidence Building Measures to deal with the challenges at hand before the economy slides into full blown deflation.
7. Business confidence remains low and Zimbabwe’s country risk premium is still high. The result is a lack of investment and financial inflows required to drive future growth.
8. Zimbabwe’s persistent current account deficit continues to be a strain on the country’s liquidity as more funds flow out to pay for imports than are generated by exports.
9. The huge import bill has, therefore, been a source of liquidity destruction.
10. It is, however, important to point out that the negative trade balance is not a deficit in its strict sense, but mostly paid for or funded from a number of sources that include Diaspora remittances and revenue from the sale of smuggled gold.
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