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MDC
Secretary General's comments on the budget
Movement for Democratic Change
(MDC)
December 01, 2006
Our crisis is bigger than a budget statement can resolve.
The 2007 budget
statement announced by Hebert Murerwa yesterday represents yet
more evidence of the mediocrity, dishonesty and the bankruptcy of
ideas of the Zanu PF regime.
More than that, it represents the paralysis
in governance arising and connected to the succession issue in Zanu
PF. Quite clearly, the decisive pronouncements and the proscribing
by Murerwa against the RBZ governor's quasi-fiscal actions is a
reflection of the intense civil war that is taking place in the
corridors of Zanu PF.
The economic crisis arresting Zimbabwe
is structural and cannot be treated by cosmetic, populist, recycled
and neo-liberal measures. We are a failed State, wherein 80 percent
of the people are unemployed, real inflation is over 3 000 percent
and where 80 percent of the population earn far below the bread-line
salary of $180 000. We are a country bedevilled by the complete
destruction of the supply side of the economy. For almost 10 years
since 1997, the country has endured gross negative growth rates,
a phenomenon unkown even in countries that have been at war.
Industry is operating at 25 percent
of its normal productive capacity. And at the back of this, the
country has seen unmitigated corruption and Zimbabwe has acquired
for itself a shameful ranking of 157 out of 159 on the corruption
ladder. The quality of life for ordinary Zimbabweans has deteriorated
and life expectancy has dropped to 34 years. This is the state of
the crisis and any honest budgetary approach should begin by recognising
that the causes of the crisis are man-made and they are underpinned
by a crisis of governance and a crisis of legitimacy. Blaming the
crisis on non-existent sanctions or droughts reflects the perennial
dishonesty that has become the national religion of this regime.
It reflects a denial mode that results in the government's inability
to craft proper and honest solutions to the problems bedevilling
the nation.
The pumping of billions of dollars
for inputs into the agricultural sector, which has been the norm
of all budgets, has clearly failed to revive this critical sector
and to restore us to our erstwhile status as the bread-basket of
the region. Wrong people, namely Zanu PF chefs and other mobile
phone farmers were allocated the land and what has happened is that
a noble cause was bastardised by subjective execution.
Equally, the pumping of billions into
mining, the creation of a mining fund and the proposed purchase
of mining equipment will not resuscitate this sector. For starters,
the reason why mining output is decreasing and why gold deliveries
have declined is not because there is no production, but because
of the massive leakages in the system. In any event, trying to revive
an economy such as ours through agriculture and mining is a false
premise. The Zanu PF vehicle of accumulation based on agriculture
and mining for supply side recovery is a model that was true and
correct in the 19th century. Raw materials without any value addition
have never been vehicles for growth. It is manufacturing, industry
and lately technology, managed in a local, inward-looking framework
bereft of any neo-liberal blemish. That will be the starting point.
The model of the Asian tigers, the
fantastic growth of China and India are not being spurred by agriculture
or mining but by these alternative development paradigms.
The identity of inflation as the number
one enemy in Zimbabwe is a reflection of a paralysis of analysis.
Inflation is a macro-economic indicator of the relationship between
the supply side and the demand side of the economy. It is a symptom
of the sickness of the economy but is not the sickness itself. Thus
it is important to identify the real causes of inflation. As popular
local musician Oliver Mtukudzi would say, " Ongorora chikonzero
chaita musoro uteme." Unfortunately, the budget does not take
this into account.
The projected 2007 budget deficit as
a percentage of Gross Domestic Product is 17 percent. This is a
huge deficit considering that the regional average is 3 percent.
This budget deficit, and more importantly the way it is financed,
will create major inflationary pressures. We have seen in the past
how Gono's quasi-fiscal experiments, equalling almost the official
2006 budget, created excess money supply of over 1 000 percent and
resulted in a major inflationary push.
Moreover, to have budget in respect
of which $1,4 trillion or 35 percent is going to be allocated to
salaries alone, is a disaster. When one adds interest payments,
it means that almost 80 percent of the budget is recurrent expenditure.
Such a scenario is not only sad, but demands that Murerwa and his
colleagues must resign. If almost 80 percent of the budget represents
salaries and interests, then it means that the critical budgets
to health, education and social services, have suffered. Indeed,
Murerwa and his colleagues will go to town about the $1,3 trillion
(30 percent of the budget) allocated to capital expenditure but
what is not disclosed is that the bulk of that money is going to
pay for penalties and punitive arrear interests on existing incomplete
projects such as the Torkwe-Mukosi dam and the dualisation of the
Harare-Bulawayo highway.
The raising of the tax-free threshold
from $20 000 to $100 000 will be applauded as being positive. However,
the reality is that the majority of the population do not even earn
$50 000 per month and the bread-line salary is $180 000 while inflation
realistically stands at about 3 000 percent. One cannot even buy
anything meaningful with $100 000 in a supermarket.
Zanu PF being Zanu PF, one thing that
concerns this regime is power and the desire to reproduce itself
legally and extra-legally. No wonder the budget allocation to the
army and the police in real terms has grown by more than 50 percent,
with the army being allocated an embarassing figure of $225 billion
for recurrent expenditure. This slush fund given to "the boys" is
more than half the budget allocation to the Ministry of Health and
Child Wefare. It's a shame!
One can go forever critiquing the sterile
and recycled ideas from Minister Murerwa. The bottom line is that
these people are now tired. as Franz Fanon said many years ago,
exhausted nationalism is a danger to the national question in Africa.
Zanu PF has clearly become a danger to the public good of the majority
of Zimbabweans.
Zimbabweans are tired of high-sounding
fiscal and monetary policy pronouncements that have failed to stimulate
economic growth and to inspire investor confidence in an economy
that has become a collective African shame.What Zimbabwe needs is
a political solution to the national crisis. What Zimbabwe needs
is a new government that has the support and the faith of the ordinary
people who have borne the brunt of failed economic policies and
a profligate government that continues to live outside its means.
Zimbabwe needs to embrace sweeping
political reforms that include a new, people-driven Constitution,
free and fair elections under international supervision, a reconstruction
and stabilisation programme in a post-transitional era and a period
of national healing. Nothing short of this political solution will
save our country.
Hon Tendai Biti, MP
MDC Secretary General
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