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Brief
analysis of the 2012 Mid-Term Policy Review statement
Southern African Parliamentary Support Trust
July 23, 2012
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1. Introduction
and Background
The Honourable
Minister of Finance, Tendai Biti, presented the 2012 Mid-Term Fiscal
Policy Review Statement
to Parliament
on the 18th of July, 2012. The Fiscal Policy was issued against
a background of deteriorating domestic conditions, characterised
by weak agriculture production, below par revenue collections, (on
account of underperformance in the diamond sector), as well as weakening
global economic conditions. The economy is therefore project to
slow down by 40% from an optimistic 2012 Budget projection of 9.4%
to 5.4%.
The minister
has thus recast his 2012 Budget
theme from "Sustaining Efficient and Inclusive Growth with jobs,"
to a more modest and compromise tone, that is "From Crisis to Austerity:
Getting back to Basics". This tone follows a no holds barred engagement
of Cabinet on the 14th of June, 2012 at a Special Cabinet Meeting
called specifically to deal with the economic situation in the country.
2. Highlights
of the Fiscal Policy Review
- Economy
to slow down by 42% from earlier optimistic projections of 9.4%
to 5.4%;
- Agriculture
to drastically slow down from a 2010 bullish high growth rate
of 33.9% to -5.8% heightening fears of food insecurity;
- Budget revised
downward by 9% to US$3.64 billion from an optimistic 2012 Budget
projection of US$4 billion, necessitating re-prioritisation
of Votes;
- Revenue
projections recast from US$4billion to US$3.64 to match expenditure,
owing to weak collections;
- Half year
revenue collections of US$1.565 billion against budget target
of US$1.838 billion, yielding a variance of US$244.2 million.
- Diamond
revenue remittances at US$49 million, account for 93.8% (US$229.3
million), of revenue variance. - Budget cut back forces Treasury
to re-prioritise expenditures, sacrificing capital and
operational budgets.
- Non wage
related Recurrent Expenditure (operational and maintenance) at
US$217.9 million against budget target of US$919 million, implying
an under - expenditure of 47%, yet wage bill stands out at 70%
of budget against target of 53%.
- Target disbursements
to Social sectors at US$36 million against budget target of US$122.7
million, yet foreign travel chewed up US$156 million.
- Excise duty
on diesel and petrol increased from 16 cents per litre and 20 cents/litre
respectively to 20 cents per litre and 25 cents per litre.
- Public Finance
Management Act Regulations to be gazetted;
- Constitution
ready and Treasury commits to fund Stakeholder Workshop and Referendum.
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