HARARE – Newly appointed Finance minister Patrick Chinamasa says sanctions imposed on Zimbabwe by Western countries — which he alleges had bled the economy — gave the country impetus to rely mainly on domestic tax revenue collections for survival.
“The government had to prudently and frugally use tax revenue for the provision of social services and amenities in order to keep the country going,” Chinamasa told a gathering to mark taxpayers’ appreciation commemorations in Harare.
“This is a day to say thank you to our taxpayers who have been honouring their obligations to the State.
“For many years now, we have had to rely on mobilisation of domestic resources for survival given the situation that we found ourselves in where we were imposed sanctions against us which hurt our economy, especially from 2000.”
This development comes amid reports that President Robert Mugabe’s government is keen on re-engaging with erstwhile colonial master Britain and its Western allies who imposed sanctions on the country at the turn of the millennium due to breakdown of the rule of law and human rights violations.
The country’s economy relatively stabilised and registered growth following the formation of a coalition government in 2009 that adopted use of a multi-currency system — but is now showing signs of burn-out owing to stunted industrial growth resulting in low capacity utilisation coupled with poor attraction of foreign direct investment and tight liquidity among other challenges.
“Through self reliance initiatives this country has been able to fend off all the machinations against our sovereignty which sought to reverse the gains of our independence,” Chinamasa said. “It became necessary for our country to mobilise resources more efficiently and effectively, this is how the idea of setting up the Zimbabwe Revenue Authority came into being in 2001.”
He said Gershom Pasi, the Zimra commissioner-general, has assured government that it was working tirelessly to surpass this year’s revenue target in spite of the shrinkage in the revenue base due to a myriad of factors.
However, independent economist John Robertson pointed out that whatever feelings one had about sanctions, it was the eviction of large-scale farmers at the height of the land reform programme in 2000 that forced agricultural output to be cut by more than half, reducing foreign earnings that left the country unable to meet its debt obligations.
“It was the forced closure of thousands of farming companies that caused the loss of hundreds of thousands of farm workers’ jobs and it was the loss of agricultural inputs that forced hundreds of factories to reduce output or shut down,” Robertson said. “When government tax revenues fell because of the loss of personal tax payments and the loss of company profits taxes, government set interest rates at a fraction of the rising inflation rate.
“This meant it did not have to pay back the money borrowed from savings institutions and pension funds.”
He said these developments led to the drying up of the country’s savings with every government department turning to the Reserve Bank of Zimbabwe for printing the required money to run the country.
“By printing all the money needed, the already high inflation rate rose further to set new world records and before long the Zimbabwe dollar was destroyed,” he said.
Robertson said Zimbabwe exported less because it had lost its manufacturing capacity and could only import what could be paid for with limited cash because of unpaid debts which destroyed the country’s credit rating.
“Those were self-inflicted handicaps and we will overcome these handicaps only by restoring our credibility and rebuilding our productive base."
“In that entire description of the economy’s collapse, I did not have to mention sanctions once,” Robertson said, adding the sanctions will go when there is a show of respect for human rights.