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deficit will get worse
November 03, 2013
The 2014 budget
is highly anticipated for many reasons but none other so than that
it is the first post-election budget of the new regime in town.
In an era marked
by shallowness and the dearth of white papers or other policy debate,
the budget becomes much more than a simple resource allocation mechanism
or a fiscal planning instrument.
It becomes as
much a political statement of intent as well as an economic document.
As a political
document it will go a long way to show the intentions and political
direction of those in office.
Will they sober
up and moderate, now that they are blessed with a comfortable majority,
irrespective of its illegitimate paternity. Or will it be a continuation
and reconnection with the pre-GNU
politics of predation.
of the many faces of Zanu-PF, which face will turn up, A Mr Jekyll
or a Mr Hyde. But it is as an economic document that more will be
disclosed by what is said and in this case probably more by what
is not said. After all, the document is a very technical instrument
which must speak to the science of textbook economics.
So it will have
to have a macroeconomic framework, with all the necessary projections.
What will be the underlying presumptions of that framework.
It will have
to have the always competently executed blue book, with the appropriations.
the framework, will it be any different from the framework in the
Zanu-PF blue print “Zim PEST.”
If it is not,
are we back to the old era of the same government with documents
that are at cross talk.
In this regard,
it will be hard to come up with a set of underlies that will justify
a growth of more than two percent for 2014.
For many, to
what extent will the document be loyal to the Zanu-PF manifesto
and all the zany ideas that $14 billion can be raised from this
economy, through Indigenisation and disposal of public assets.
challenge in formulating this budget will be resources. In simple
terms, how to finance the same.
never been in abundance. We all know that, so the task is always
that of managing a tiny envelope in an ocean of high demand and
But what compounds
matters is that revenues have been dwindling, and Zimra, through
no fault of their own, cannot meet the 2013
Budget demands. So Zanu-PF has no choice but to do the obvious
and spend what they have. They must eat humble pie. It is called
“we eat what we kill”
is too small for their ambitions and they cannot easily monetise
that. In the short-term, they will resort to toxic debt from all
angles and dubious corners at usurious rates of interests.
will come to haunt the economy sooner rather than later.
that China or South Asia will provide resources is one that will
be tested and its naivety proven.
For a party
that genuinely believes money grows on trees, the concept of “eating
what you kill “ will be impossible to live with. It is therefore
easily foreseeable that the Zimbabwean dollar has to be brought
back, to allow monetisation of the humongous obligations and election
It is just a
but question of time.
is another issue that will haunt the regime. It is called the revenge
During the GNU,
Zanu-PF created parallel structures of revenue collection, chief
of these being diamond revenue of course.
But there were
other massive funds that despite the clear provisions of the Public
Finance Act and the Constitution,
retained their collections.
The most notorious
being funds under the ministry of Home Affairs, the Police Fund,
and the Registrar General.
It is going
to be impossible to dismantle the toxic deep founded structures
of a parallel government. So the era of fiscal hemorrhage will continue.
But while the
parallel structures of revenue collection will remain unabated,
the parallel unaccounted and off budget toxic expenditure incurred
nocturnally during the GNU will be loaded to the treasury.
could run into hundreds of millions.
arrears of over $300 million, and other unbudgeted for expenditure
such as the $150m Zambia maize loan scheme and the recent debt accrued
in respect of the $160 million government agriculture input scheme,
it is Armageddon.
One has not
even factored in the issue of the 2013 bonus.
A basic arithmetic
model will show the unthinkable.
That as we head
towards 2013,projected net revenues for 2014, are less than accrued
arrears of 2013. Put simply, there is huge budget deficit in excess
of the 2014 income.
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