HARARE – Zimbabwe will increase mining royalties soon to raise $132 million to bankroll the forthcoming elections, Finance minister Tendai Biti (pictured) has said.
In an economy expected to grow by five percent this year, mining and agriculture are the two major economic drivers and Biti is mulling introducing new taxes for miners to bankroll the forthcoming elections instead of borrowing on the debt markets.
The $100 million that had been promised by Pretoria hangs in the balance after a South Africa Treasury spokesperson said the two governments were only “engaged in ongoing discussions.”
Fresh from funding a March 16 referendum from Treasury bills floated for National Social Security Authority (Nssa) and Old Mutual, Biti has said he will not borrow again from the private sector given the liquidity crunch that was caused by the $40 million drawn from the two institutions.
Old Mutual and Nssa provide 60 percent of domestic credit to the banking sector in Zimbabwe, particularly to the smaller banks. The net effect of borrowing $40 million from the private sector for the referendum caused the crowding out of the productive sector of the economy which would otherwise be borrowing this money.
Biti has said it was not possible to continue borrowing money from an already over-strained private sector that has in fact a huge appetite for funds to fund working capital for its operational costs, “so we have no intention as Treasury to do that again.”
“The fact of the matter is Zimbabwe does not have the resources for funding the election,” Biti said.
Biti raised excise duty on fuel on March 9 but said the raise was meaningless, “it will raise $50 million by the end of the year, it’s meaningless because we require the money now.”
“What we did in the referendum cannot be reproduced if we want to maintain a stable and sustainable economy with growth rates of five percent that we predicted in the 2013 budget,” Biti said.
“And certainly Treasury, this ministry of Finance and this minister of Finance have no intentions of emasculating, of assaulting the economy for this event that will come on one day.
“We are not going to borrow again for this election.”
Biti said he was mulling introducing three or four other taxes, including some on the mining sector.
However, it is anticipated that further pressure on the mining sector could deter investment in the country, which has the world’s second largest reserves of platinum.
Besides mining royalties, Biti also hopes to raise cash from the international community, diamond revenue, and mobile telecommunication firms’ licence fees. – Gift Phiri, Political Editor