Editorial Comment

ED has a clear economic turnaround programme

THE new dispensation under President Emmerson Mnangagwa has set its ducks in a row.

Starting with the stabilisation programme (2017- 2019) which was succeeded by the National Development Strategy 1(2020 to 2025), it is evident that the government has a clear programme to turnaround the economy and achieve Vision 2030.

There is evidence of economic planning by Mnangagwa. If a country fails to plan, it perishes.

Year in and year out, the Ministry of Finance tables three important policy documents before Parliament. These are the Mid-term Fiscal Policy Review, the Budget Strategy Paper and the National Budget. The Monetary policy statement is not tabled in Parliament, but presented to Cabinet by the Governor of the Reserve Bank. In my view, this is an anomaly that must be corrected.  The Minister of Finance must also present the Monetary Policy Statement to Parliament. 

The mid-term fiscal policy review statement on Thursday revealed a growing economy that is in a process of disinflation.

The economy will grow by 7.8 percent in 2021 up from the initial forecast of 7.4 percent. The good agricultural season is the main anchor of this economic growth trajectory.

As at June 2021, maize deliveries to the GMB stood at 650 000 metric tonnes valued at $20 billion. All in all the country expects to harvest 1.9 million metric tonnes at the end of the 2020/21 agricultural season.

Inflation is coming down from 800 percent in 2020 to 56 percent in June 2021 and is expected to reach 35 percent by December 2021 on the back of price and exchange stability.

The Dutch auction system is holding at US$: $85 while the gap between the official and parallel exchange rate remains constant, if not narrowing.

Reserve money supply continues to be capped at less than 25 percent and the financial sector is sound. Forex deposits now stand at US$1.6 billion.

The other good news is that the balance of payments is doing fine. As at June 2021, the economy registered a positive trade balance of US$600 million. Exports are now approaching US$5 billion. Minerals and tobacco are driving export growth while imports are coming down. We must now start to see more domestic products in retail shops consistent with the emerging import substitution.

The negligible budget deficit of 1.3 percent will be cleared by end of 2021. Therefore, in terms of growth macroeconomic and fiscal performance, Zimbabwe is on the recovery path. Diaspora remittances are expected to hit the US$1.3 billion mark by December 2021.

The government is investing heavily in infrastructure as part of its public sector investment programme (PSIP).

Of particular note is the growth of capital expenditure on roads and  energy projects. No wonder why the IMF concluded that the economy is buoyant and poised to register a six percent rate of growth in real GDP in 2021. With the coming in of Special Drawing Rights (SDRs) from the IMF in the amount of US$1 billion, the prospects of Zimbabwe are bright. 

Although the mid-term review gave a glowing picture, authorities must not relax or rest on their laurels.

There are still so many perceived and real downside risks. Firstly, the Covid-19 pandemic still poses a huge danger to the sustainability of the economic recovery witnessed this far.

The government must increase the supply of vaccines in order to reach herd immunity.

Secondly, there is growing poverty and increase in equalities. To this end, the government still needs to broaden and deepen social protection and social safety nets.  The poor and vulnerable groups are suffering even though the economy is growing.

Most Zimbabweans are still yet to benefit from social inclusion and the “trickle down” effect of growth.

Moreover, formal jobs must be created alongside the entrepreneurship of the informal sector. Thirdly, value addition is still elusive as the country continues to export raw minerals.

Fourthly, the structure of the economy depicts more informalisation, suggesting vertical growth as opposed to horizontal growth. Zimbabwe must avoid enclave growth and make sure that growth is structurally balanced.

There must be a social contract to monitor price levels so that the people benefit from the exchange rate and price stability as they did during the government of national unity.

ν Mashakada is an economist, former Economic planning minister and current MDC-T treasurer general.

For the majority of Zimbabweans, stability remains a pie in the sky. For the people stability should mean access to water, drugs in hospitals, affordable education, and access to housing and improved standard of life. The benefits of stability   must be palpable and felt by the ordinary masses. 

While the economic dashboard is green, authorities must make sure this translates to socio-economic transformation in their life time. It is this real transformation which hopefully can be achieved under NDS1.

Fifthly, the purchasing power parity of civil servants’ salaries remains a big challenge. The economy is self-dollarising and most goods and services are charged in the greenback.

These are some of the challenges we still confront pari pasu with growth and stability. Of course dealing with these structural challenges is not going to be a quick fix. It is a process. All citizens must rally behind vision 2030 in order for it to be a shared vision.

Majority of people still think Vision 2030 is a Zanu PF vision, not a national vision. Of course they are wrong. For now the government must be commended for stabilising the macroeconomic environment and laying the foundation for economic take off.

The economy is moving in the right direction.

The mid-term fiscal policy review was buttressed by the 2022 Budget Strategy Paper which shows that the economy will register a 5.4 percent growth rate in 2022.

According to the Minister of Finance, for the first time in 20 years, corporate tax has surpassed individual taxes, suggesting a recovery in the manufacturing sector.

The minister of finance announced that this year there won’t be any supplementary budget. It is hoped that elections will not reverse the gains achieved so far.

The renewal of the MDC as the official opposition under Douglas Mwonzora has managed to reduce the toxic nature of politics in Zimbabwe and hence contributing to the general confidence, peace and stability the country is enjoying.

Our commitment to an all-inclusive, unconditional process of dialogue is a step in the right direction.

The MDC wants to be part of the solution, not part of the problem. We have no any other country except Zimbabwe. We must put Zimbabwe back to work again and achieve Vision 2030 as a united people. Let us shun and fight corruption together. It is a cancer to our body politic.

Dr Tapiwa Mashakada is an economist, former Economic planning minister and current MDC-T treasurer general.