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The 2013 budget: The challenges and priorities SAPST advertorial November 2012
Southern African Parliamentary Support Trust
November 15, 2012

http://www.sapst.org/index.php?option=com_content&view=article&id=273&Itemid=83

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Introduction

The run-up to the 2013 Budget has been characterized by anxiety and mounting expectations. Using this platform we intend to share with the readers our views on the forthcoming 2013 National Budget through this space. The first article in this series examines the context for policymaking at this Budget. The next article will discuss what a development Budget could look like in Zimbabwe based on the experiences of countries that succeeded in transforming their economies. The final article will assess the measures taken in Budget 2013 against the analysis of the first two articles.

The economy has stabilized, but no solid recovery yet

Ten years of economic decline have weakened Zimbabwe’s capacity at all levels of Government, depleted the financial, physical and human capital of both public and private sectors, and led to the collapse of basic services. The appointment of Government of National Unity (GNU), in early 2009 ushered in a new economic dispensation in Zimbabwe that was capped by the launch of the Short Term Economic Recovery Programme (STERP), that fostered to restore economic stability. One of the key installments of this programme was the roll - out of economic stabilization reforms, key of which included the adoption of the multi - currency exchange rate system that allowed business and the public to transact using the South African Rand as a reference currency, whilst other currencies such as the United States Dollar, British Pound, Botswana Pula were also allowed to serve as legal tender. The most notable success of these reforms was the immediate abatement of inflationary pressures from a hyperinflation peak of 128,000,000% in August 2008, to current levels of below 5%; 2012, with bright outlook of 5% for the medium term; 2013 – 2015.

On the national output (GDP) front, after a sustained period of economic decline that accounted for more than 48% slump in output during the decade, 2000 -2008, catch - up growth should be rapid. The results of economic stabilization - single digit inflation of below 5%, and growth rates of above 7% - have been characterized as a recovery, yet, growth has now slowed. Ministry of Finance’s forecasts of GDP over the medium term (averaging 6.7% between 2013 and 2015) appear optimistic given the downside risks - the prospect of a deeper global recession, an unstable business environment, and the continued squeeze on liquidity.

Taking a regional comparison, if Zimbabwe were to have grown at the average rate of other SADC countries between 2000 and 2011, per capita GDP would be triple what it is today, at $1,612 - levels comparable to Tanzania and Zambia ($1,610 and $1,692 respectively), although only a tenth of that found in Botswana (at $16,105 per capita in 2011). Table 1 provides a snapshot of this scenario. In contrast, between 2000 and 2008, output in Zimbabwe nearly halved and GDP per capita in 2011 was still only $515 - saved only by the DRC from becoming the poorest member of SADC.

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