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Economic Revival Plans Criticised

Analysts cast doubt on the government’s rosy predictions of recovery.
By Jabu Shoko

President Robert Mugabe, buoyed by Morgan Tsvangirai’s intention to join him in the government of national unity, GNU, this week, has proposed a reconstruction budget for the next 12 months to rejuvenate Zimbabwe’s economic fortunes – but analysts doubt whether this can be achieved.



Mugabe’s acting fnance minister, Patrick Chinamasa, unveiled on January 29 a 1.9 billion US dollar budget in which the government virtually dropped the populist polices it has used for the past eight years to curry favour with the electorate, and instead vowed to rebuild Zimbabwe during the new political dispensation.



With the populist policies out of the way, Chinamasa predicted an economic growth rate of two per cent for 2009 in addition to revenue flows from a new tax and customs regime.



However Eric Bloch, a respected Bulawayo-based analyst, said he feared the government’s projections could turn out to be fiction. He cited the precarious state of all sectors of the economy, on their knees due to the myriad problems that have bedevilled the country for nearly a decade.



"This unusual display of realism, albeit muted in some respects, was emphasised by the identification of many key areas that need to be urgently addressed by government,” he said.



“However, as surprisingly transparent and factual as was most of the acting minister’s evaluation of the current dismal state of the Zimbabwean economy and of the necessary transformation objectives, the declared budgetary measures and targets, and the stated intended actions to achieve them, whether or not genuinely intended, are unfortunately very likely to prove fictional."



The government’s reconstruction budget commits funds to food security, water management, guaranteed fuel and electricity supply, improved delivery of health and education services, and the rehabilitation of transport infrastructure, among other development projects.



In a departure from past policies, Chinamasa said there would no longer be free or cheap loans for farmers and small businesses.



Chinamasa also revealed that the government intended containing the present rampant inflation – officially estimated at 231 per cent but thought to be over eight trillion – through tightening of fiscal and monetary policies.



He said the government sought to link expenditure to actual revenue, which is a marked departure from the past, where the country’s central bank printed money willy-nilly.



"The 2009 budget thrust should therefore shift from policies that promote and fuel consumption to those which create wealth through supporting our productive sectors, particularly agriculture, mining, tourism and manufacturing, whose capacity utilisation is below 30 percent," said Chinamasa.



Mugabe’s right hand-man said the central bank would no longer dabble in printing money, an activity which critics blame for fuelling inflation.



"Excessive money supply growth emanating from unbudgeted expenditures made through the reserve bank as well as a low supply of goods and services remain the major sources of inflation," Chinamasa said.



Bloch remarked that the budget statement unusually acknowledged many of the grievous economic circumstances prevailing in Zimbabwe, but he said, "One must fear that the government’s inability to contain expenditure is endemic and will continue in the year ahead."



This fear, Bloch added, was reinforced by there being no declaration of intent to reduce what he described as the "gargantuan" public service in general and the defence forces in particular.



The inclusive government will have 31 cabinet ministers and 15 deputy ministers. These and other senior government appointments were agreed to by the three political parties under the Global Political Agreement, GPA, sponsored by the Southern African Development Community and brokered on September 15, 2008 by former South African president Thabo Mbeki.



There are concerns the bloated government will be a major drain on public finances.



Mugabe’s critics, especially the opposition Movement for Democratic Change, MDC, have all along blamed Mugabe’s populist policies for the present sorry state of the economy, where around half the 9.5 million population is surviving on handouts from international donor agencies.



Instead of stimulating economic growth in production, the government held to the free distribution of fertiliser, tractors, maize and other farming inputs – a policy that fast-tracked the economic collapse of the country, noted Useni Sibanda, the coordinator of the Christian Alliance of Zimbabwe.



"As Christian Alliance, we welcome this budget statement with guarded optimism but there is a serious danger that come election time, say after 18 months to two years of the GNU, we might see the political parties dishing out sweeteners," said Sibanda.



Chinamasa said the budget sought to liberalise many facets of Zimbabwe’s battered economy, which has been under a command economy for nearly ten years now.



But Fambai Ngirande, spokesman for the National Association of Non-Governmental Organisations, said the liberalisation of the economy at this time did not augur well for the poor.



"In having a broad-based liberalisation programme without an allied social support framework, the budget in many ways is insensitive to the plight of more than three-quarters of the Zimbabwean population currently unable to meet their basic needs or actively participate in a free market," said Ngirande.



Chinamasa also unveiled a raft of revenue-generation measures underpinned by enhanced collection of traditional taxes and duties which took effect from February 1.



But Bloch said the government was unlikely to be able to match expenditures and revenues because the expectation of two per cent economic growth in 2009 was overly optimistic.



"It is too late for agriculture to contribute to this year’s projected economic growth; the mining sector’s productivity is presently reduced; the manufacturing sector’s productivity has declined from 75 per cent of capacity in 2002 to a niggardly ten per cent at present; and all other economic sectors are in similar decline," he noted.



Jabu Shoko is the pseudonym of an IWPR-trained journalist.

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