HARARE – Zimbabwe could miss the projected five percent economic growth target next year as Finance minister Tendai Biti’s budget does not capacitate the productive sector, economic analysts said.
The analysts said Biti needs to direct expenditure towards the sector.
The Treasury chief’s projected economic growth is underpinned by anticipated output improvements in the mining and agriculture sectors.
Brains Muchemwa, an economist, said unless drastic measures are implemented to steer the economy to “safe waters”, the five percent growth target is a toll order.
“The budget is largely consumptive at the expense of local industry,” Brains Muchemwa to Members of Parliament at a post-budget review on Monday.
“What this means is that we are promoting and sustaining jobs in South Africa and China. As it stands, the economy is not going to create more jobs and companies will close due to lack of funding,” Muchemwa said.
He said measures must also be taken to reform the civil service.
Muchemwa warned that with the impending elections next year, the economy is likely to take a knock from policy inconsistences.
Biti allocated $50 million for elections and referendum in his 2013 National Budget.
Traditionally, elections have dealt huge blows on Zimbabwe’s economy.
Paddy Zhanda, a businessman and legislator, said; “The shortfall for this current budget is that there is no emphasis for exports. An economy cannot grow without efficient manufacturing and export sectors.”
“The government must come up with incentives for exporters, not just monetary incentives but they can be in the form of duty reduction, to boost our exports. Exports are key to stabilising currency and also help in reducing the current account deficit,” said Zhanda.
John Robertson, a leading independent economist, said the decline in the funds allocated to the agriculture sector is a clear indication of tough times ahead.
Despite agriculture being the lifeblood of Zimbabwe’s economy, Biti allocated $159,4 million to agriculture for the 2012/13 farming season compared to $226,7 million in 2012.
The sector requires approximately $2 billion to restore full capacity.
“We are not only producing far less in agriculture products, but we are also paying more for exports. We are spending more money buying things we used to produce locally, and this does not encourage economic growth,” said Robertson at the same occasion.
Robertson said that a 33 percent increase in civil servants’ salaries since 2009 spells doom for an already burdened economy.
“It’s not bad to pay good salaries to civil servants, but the problem is, we have a small economy that has grown smaller in the past few years,” he said.
Of the $3,8 billion 2013 national budget presented by Biti, 73 percent has been earmarked for government salaries.
“We have not entered into a sustainable path to recovery and, most regrettably, is the overwhelming evidence of stagnation,” he said.
However, Biti has conceded that 2013 will be a tough year.
“The 2013 outlook looks bleak — blighted by a miscellany of factors that include a deeper global outturn, the continued capital deficit, financial sector instability, and a poor business climate, amid other challenges,” he said.
The Finance minister has been forced twice to revise downwards 2012’s economic growth from the initial 9,3 percent to 5,6 percent and for the second time to 4,4 percent.
This was due to a poor agriculture season, contraction in manufacturing sector and liquidity constrains prevalent in the economy. – Buisness Writer