Budget delay worsens economic situation

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HARARE – The announcement last week by Finance minister Patrick Chinamasa that the 2014 National Budget presentation has been postponed to next month makes sad reading for the country.

Since the outcome of election results in August, Zimbabwe is desperately waiting for clear policy direction to steer the country out of the economic stagnation being experienced by industry as well as by individuals.

The flimsy excuse given by Chinamasa that the Budget would not be presented this month as is the norm because he needs more time to consult does not hold water because the nation is burning.

“We don’t have a budget statement in November. I need more time, possibly in December, but we will meet the constitutional requirement of doing it by January 2014,” he said.

The economy, which grew by an average of seven percent between 2009 and 2011 following the establishment of the inclusive government, began stalling last year due to political uncertainty and constant bickering in government.

Last year, the economy grew by 4,4 percent and is this year expected to grow by 3, 4 percent as a result of declining metal prices and drought affecting the country.

Following the rapid contraction in the economy — as evidenced by declining manufacturing capacity utilisation, high costs of living, worsening liquidity crunch and excessive power and water outages among others — we would have expected the new government to announce something concrete sooner rather than later to shape the country’s future.

From the look of things it seems government is content to let the economy freeze without injecting any new fresh policies and economic direction.

Companies operating in the country are being forced to retrench and seek alternative new bases due to the absence of key policy instruments such as the National Budget and the Monetary Policy.

With rising unemployment now hovering over 90 percent and a massive shutdown of companies, one would have expected the new government — which promised to create 2,265 million jobs in the election campaign trail — to act quickly and stop this scourge.

If the economy lingers to deteriorate at this pace in the next two months while government continues to ‘consult’ there would be no economy to talk about in 2014.

Investor confidence has reached rock bottom in the country and many foreign investors are shying away from Zimbabwe taking their monies to neighbouring countries with conducive business environment, thanks to the Indigenisation policy.

Already the International Monetary Fund (IMF) has predicted a gloomy future forecasting Zimbabwe’s growth to be around three percent this year with little prospects for a recovery in 2014.

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