Budget to sustain prices stability: Ncube
By Mugove Tafirenyika and Perpetua Rojasi
FINANCE minister Mthuli Ncube yesterday said the 2021 National Budget will focus on improving the lives of long-suffering Zimbabweans through sustaining the current basic goods price stability and job creation.
In recent months there has been a semblance of economic stability in the country, characterised by falling prices
of basic goods and services, which economic experts attributed to the introduction of the foreign currency auction system in June, which resulted in a steady local currency.
This comes as President Emmerson Mnangagwa has expressed hope that the country’s new economic blueprint, the National Development Strategy (NDS) 1, would improve people’s standards of living on the back of the prevailing stable economic environment.
Speaking during a pre-budget seminar with MPs in Harare, Ncube said water and sanitation, agriculture, health,
energy, education and transport, among other priority areas, would be on the budget’s priorities.
“We expect commodity prices to remain stable as the exchange rate stability has impacted inflation resulting in it
excessively slowing down and we still expect the inflation rate to keep falling down,” Ncube said.
Ncube said the budget shall also emphasise on productivity through strengthening value chains in agriculture
and manufacturing sectors. “We seek to maximise value from mining and tourism sectors since the
country has been deriving the optimal returns from natural resources to significantly change the citizens’ livelihoods.
The government will increase resources allocation to support the fight against corruption in 2021 as well as efforts to maintain peace and security,” he said.
The government, Ncube said, was targeting the creation of 760 000 jobs by the year 2025. On his part, Reserve Bank governor John Mangudya said the country’s fiscal authorities were determined to maintain financial sector stability and to achieve that “we will mainly focus on strict monitoring of mobile banking activities”.
“I see a bright future for Zimbabwe. A bright future with low inflation and one that is pregnant with hope. Price stability, exchange rate stability and financial sector stability are the three pillars of the monetary side of the economy,” Mangudya told the legislators.
“We have a three-pronged strategy of fostering price and financial systems stability. We also want to foster the
exchange rate stability so as to minimise the pass through effects of the exchange rate instability to prices.
“We also want to manage the supply of money in the economy so that at the end of the day, we do not have too much money to chase too few goods—inflation. It must be sufficient enough to ensure that the economy continues to go forward. “The primary focus is to foster price and financial services stability to nurture economic development as we journey towards vision 2030 of becoming an upper middle class country. We must keep the local currency credibility and stability high for business planning and promoting the welfare of consumers,” Mangudya added.
Speaking on Monday during the launch of the NDS 1, whose implementation commences in January until 2025,
Mnangagwa said the new economic blueprint would allow the nation to build on the achievements and lessons learnt during the implementation of the Transitional Stabilisation Programme (TSP).
NDS1 is expected to see the economy growing by five percent every year during its five-year lifespan — which
growth would be driven by agriculture, mining, manufacturing and tourism.
According to the blueprint, the accelerated growth would see the creation of 760 000 jobs in the formal sector, the
further reduction of inflation which is currently at more than 450 percent — to between three and seven percent by end of 2025.
When the TSP was unveiled in October 2018, Ncube was heavily criticised at the time for his blueprint — which
saw him, among other things, introducing an unpopular two percent transaction tax, which critics said had worsened ordinary people’s economic hardships.
The TSP’s introduction also kicked in at a time that Zimbabwe began to experience its worst economic crisis in a
decade, triggering steep prices of basic consumer goods — amid rising inflation, shortages of fuel and critical medicines. “The TSP has undoubtedly delivered notable critical successes and set a firm foundation upon which we can build and achieve our objectives as laid out in the NDS1.
“In view of the above, the NDS1 will, therefore, be rolled out under better economic conditions than the TSP and
carries with it bold strategies and policies to catapult the economy,” Mnangagwa said at the launch.