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Fiscal
and Monetary policies review
Media Monitoring
Project Zimbabwe (MMPZ)
Extracted from Weekly Media Update 2004-30
Monday July 26th – Sunday August 1st 2004
THE government
media’s passive endorsement of government policies was further demonstrated
by the manner in which they handled the mid-term fiscal and monetary
policy review statements released during the week.
The policies,
presented by Finance Minister Herbert Murerwa (Fiscal) and Reserve
Bank Governor (RBZ) Gideon Gono (Monetary), form part of government’s
economic rescue efforts meant to avert the country’s economic collapse.
Instead of critically
analysing the policy statements, the government media chose to unquestioningly
endorse and celebrate the authorities’ proposals as the ultimate
solution to a myriad of economic problems besetting the country.
Alternative
views were only provided by the private media, which raised several
pertinent concerns about certain issues emanating from the two presentations.
But like the
government media, the private media also failed to adequately cover
Murerwa’s Fiscal Policy Statement and concentrated more on Gono’s
Second Quarterly Monetary report.
Thus some of
the facts and figures constituting Murerwa’s fiscal policy escaped
thorough interrogation. Neither was there an in-depth reconciliation
of the minister’s fiscal policy with Gono’s monetary plan.
For example,
none of the media seemed to have noticed or questioned the absence
of the new ministries of Policy Implementation, headed by Webster
Shamu, and the Anti-Monopolies and Anti-Corruption, led by Didymus
Mutasa, from Murerwa’s table of government expenditure. As a result,
Zimbabweans remained in the dark on the expenditure and budget allocations
of the two ministries.
However, this
uncritical conduct of the media was more pronounced in the government
media, which highly generalised the country’s economic successes.
The Herald
(28/7) story, Economy on the mend, captured the mood of the
government media when it declared that the economy "has
turned the bend and is now on a firm recovery path which will be
bolstered by measures contained in the monetary policy review statement".
It claimed that
major macro-economic fundamentals such as foreign currency exchange
inflows and availability of basic commodities had stabilised over
the past six months "in response to monetary and fiscal
policy measures implemented since the beginning of the year".
The decline
in the year-on-year and month-on-month inflation rate was also touted
as an indicator of the country’s economic recovery.
The Herald
was supported by ZBC (27/7, 8pm), Chronicle (28/7), Sunday
News and Sunday Mail (1/8), which also praised government’s
fiscal policies, particularly the increase in the non-taxable income,
which was dismissed as too little by the Zimbabwe Congress of Trade
Unions (ZCTU) in a Press release.
Yet none of
the government media took this up and queried whether the increase
in the non-taxable income from $200 000 to $750 000 was realistic
in an extremely high inflationary environment of about 395 percent,
considered to be one of the highest in the world.
But the private
media did. For example, SW Radio Africa (27/7) quoted the MDC spokesman
Paul Themba Nyathi saying the increase was "still below
the poverty datum line."
The Daily
Mirror (27/7) agreed. It pointed out that government’s proposed
non-taxable figure fell far short of the poverty datum line of $1,500
000 that had been proposed by the ZCTU. It argued that the new figure
meant, "the majority of the money will … be restricted
to domestic need", adding: "Workers are
not at work simply to feed their four or five children".
Similar sentiments
were echoed in The Zimbabwe Independent (30/7). It quoted
MDC MP for Harare South Gabriel Chaibva, economist John Robertson
and ZCTU secretary general Wellington Chibhebhe noting that by the
time the new non-taxable income would be effected on September 1,
it would be meaningless because inflation would have further eroded
the workers salaries.
Besides, the
private media challenged the government media’s regurgitation of
Murerwa’s pronouncement that government had "met and
even surpassed most of its revenue and expenditure targets to consolidate
efforts to reduce inflation", The Herald (27/7)
and Chronicle (28/7).
While the two
official papers quoted Murerwa alleging that government had successfully
reduced its budget deficit to $880 billion against a projected budget
deficit of $1.4 trillion "within the first half of the
year", The Financial Gazette (29/7) claimed
that the target was actually for the end of the financial year,
which meant the authorities had gobbled up about 63 percent of that
money within the first six months.
And though Gono
claimed that the rapid decline in inflation had improved confidence
in the productive sector, the Independent and Standard
cited economic commentators doubting this. They argued that the
economic decline was only slowing and not reversing. Observed The
Standard: "This is evident from the month-on-month
inflation rate which in spite of falling to 4.9% in April rose to
6% in May before climbing up to 9.2% in June."
The private
media also pointed out that contrary to Murerwa’s claim that government
expenditure had been tightened, government continued to dish out
money to ministries without proper accounting. For example, The
Financial Gazette deplored the "parcelling out of
billions of dollars to pathetically performing parastatals in the
form of debt relief". Together with Independent,
it also observed that Murerwa had not even said where the money
that constituted the deficit had gone.
The Gazette
quoted economist Danny Meyer: "This is the same government
which has failed to spend within its limits. I do not see them changing
now, especially considering that they are fighting for political
survival".
In fact, though
acknowledging Gono’s well meaning efforts, the Gazette, Independent
and Standard (1/8) singled out government’s excessive expenditure
and the current unstable political environment as the greatest threats
to the RBZ governor’s plans to turn around the economic fortunes
of the country.
Interestingly,
both Gono and Murerwa’s monetary and fiscal reviews were silent
on the effects of Zimbabwe’s volatile political scenario on their
plans, which according to "evidence from IMF"
cited by the Independent "suggests
that the country is seen as one given to arbitrary and unpredictable
measures, and selective enforcement of the rule of law".
The paper therefore warned that "Gono’s statement may
… turn out to be a good dance outside the arena" because
"government’s appetite to spend what it does not have
is likely to be whetted as next year’s general election looms".
In fact, The
Standard, which dismissed government media claims that the
economy had "turned a bend" and was "on
the road to recovery" as "a gross pervasion
of the truth", quoted Robertson saying Gono’s monetary
policy lacked "any strategy to address the fundamental
pre-conditions for economic recovery".
Said Robertson:
"It is a lot of words without substance. I am not impressed
with the depth of the proposals but by the manner he delivered the
speech." But The Sunday Mail still
insisted that Murerwa and Gono’s presentations "had one
clear message – the economy has turned the corner".
More examples
of economic woes contradicting government media’s projections of
a recovering economy were given expression by the private media.
For example,
The Financial Gazette and Zimbabwe Independent carried
reports highlighting the accelerated collapse of the formal sector,
the tobacco industry and the agricultural sector in general. The
stories seemed to vindicate Gono and Murerwa’s predictions that
Zimbabwe’s Gross Domestic Product (GDP) would contract by five percent
this year.
The government
media as exemplified by ZTV ignored such reports. Rather, it (27/7,
6pm) glossed over these economic problems by celebrating Gono’s
claims that "foreign currency inflows have increased
by 380%" without explaining whether that was enough
for the country’s needs, including servicing its ballooning foreign
debts.
The increase
in foreign currency inflows was partly attributed to the Homelink
Money Transfer System, which the central bank introduced as an official
means for Zimbabweans living in the Diaspora to send foreign currency
to their relatives back home.
ZTV (27/7, 8pm)
reported that to make Homelink even more effective and stem the
foreign currency parallel market, Gono had "put in place
additional measures" that would see those receiving
money from outside getting it in local currency at a new rate of
US$1: ZW$5,600.
Previously,
recipients of the foreign currency could choose whether they wanted
the money in hard currency or the equivalent in Zimbabwean dollars,
then pegged at the prevailing auction rate of about ZW$5,300 to
US$1.
While ZBC presented
Gono’s new measure as a positive move that would curb the resurgent
parallel market, the private media revealed otherwise.
SW Radio Africa
(29/7), for example, quoted economic analysts describing the latest
development as "desperate and reactive and a shifting
of goal posts by the RBZ." One analyst was quoted saying
the latest decision "will lead to a further
boost to the black market", as government’s exchange
rate was "35% less than the black market rate".
The Independent
and The Standard quoted analysts raising similar views.
Visit the MMPZ
fact sheet
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