By Dr Tapiwa Mashakada (MDC Secretary for Finance and Economic Affairs)
The 2019 National Budget must be read and construed as a transitional budget whose slant is the sanitisation of the fiscal mess created by the Zanu PF government over a prolonged period of time. Its a stop gap measure budget that is bereft of substantive measures to stimulate production and spur sustainable growth. In this context it is a demand management budget specifically targeted to primarily deal with the budget deficit without its current account twin which requires the boosting of exports and production, including the attraction of capital flows.
The budget statement invokes a sense of deja vu in regard to its heavy tilt towards recurrent expenditure. Revenue collection at $6.6 billion falls far too short of the $8.8 billion expenditure leaving a funding gap at 5% of GDP. Its a fiscal conundrum. The devil which the budget is trying to slay is the budget deficit which is driven by employment costs. Moreover, there are downside risks and fundamental issues which have remained unresolved. These are
(1) The 1:1 exchange rate between the US Dollar and the bond
(2) The decommissioning of the bond note which is driving parallel market rates
(3) The currency crisis and liquidity crisis
(4) The restricted money supply of the US Dollar.
So the jury is still out as to when these structural issues will be tackled. The Minister is addressing the symptoms and sanitising the fiscal mess whose roots are historical. The question of domestic resource mobilisation has not been adequately addressed. The acceptance of duty in foreign currency could be an admission that the bond note is not viable. The market will take the cue from the Minister and set prices in US dollars a trend that has already begun. It will propel parallel market trading.
The other big elephant in the living room is hyperinflation which has not been addressed. How will the prices come down? Inflation threatens to wipe all collected revenues. The budget does not have measures to address rural development and growing poverty. The reduction of salaries is a paradox-salaries gobble a huge chunk of revenues yet they are not adequate given the hyperinflation. The debt question is vexing. Zimbabwe has missed the HIPC status because of the rebasing of the GDP which has put the per capita GDP at a level of US$1300 yet this is a false construction.
That is the reason why i think we cannot judge the input of Prof Ncube because he has not yet started. He is dealing with a deep seated historical and structural problem which requires political will. In all fairness his budget will be in 2020. Finally it is not true that austerity is prosperity.
This a dangerous Neo-liberal mantra which is anti-poor. The mantra celebrates the suffering of the poor who are bearing the brunt of the TSP which is a structural adjustment program. There is no evidence in the measures to show that the budget will create jobs because the manufacturing is struggling.
