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Chinamasa’s tough budget balancing act

Finance and Economic Development minister Patrick Chinamasa presents the 2016 National Budget on Thursday amid very little inflows to Treasury due to the prevailing economic downturn.

BY TARISAI MANDIZHA

Latest statistics from the Zimbabwe Revenue Authority show that revenue collected in the third quarter ended September 30 was $878,22 million against a target of $964 million as the economic environment took a toll on revenue heads.

Patrick-Chinamasa-on-a-budget-day

This has raised fears that the authority’s annual revenue collection target of $3,76 billion will not be met.

This also comes as Chinamasa was last year forced to cut the 2015 budget to $3,76 billion from $3,99 billion because of the low performance of the economy.

The 2016 budget comes as government is struggling to contain the civil service wage bill which chews 80% of the revenue collected, crowding out other crucial national needs.

Economist John Robertson said the budget should put priority on restoring economic activity in the country.
“Currently, the country is suffering from serious decline in economic production. Government priority has got to be restoring the economic activities. We are importing most of our products,” he said.

He said government needed revenue which could only come from economic activities, adding that Zimbabwe used to export a lot of food and employed many people that it paid well.

He said government should address these challenges by reviewing the indigenisation policy and commercialising land.

“Restore economic activity; decide what needs to be done and do it as quickly as possible. On the land reform, put the land back into the market and review the indigenisation policy. The manufacturing and mining sectors have been badly damaged by indigenisation and we have got to stop doing things that affect our economy,” he said.

Robertson said the government should prioritise investments in social services rather than channelling more resources to the army.

In its submissions, the Confederation of Zimbabwe Industries (CZI) pledged to work with government to ensure the industrialisation agenda was driven forward.

“we have come up with strategies that we will use to re-industrialise. We are also working on value chains for economic development. This will assist in having government interventions that do not distress other players in the value chain. Intervention should be value-chain based. Work is underway to conduct comprehensive studies of prioritised value chains. Much remains to be done in Zimbabwe to improve the business environment,” CZI president Busisa Moyo said.

He said the priority areas which government should address included the inflexible labour market and high cost of labour, high cost of finance and lack of long-term funding.

“High cost of retrenchments and labour costs generally impede competitiveness. Whilst the new labour amendments make it easier to restructure, they fall short of what is needed to address the extent of labour market inflexibility. In particular, the concept of centralised collective bargaining by industry is outdated.”

Moyo said the labour amendments had brought challenges.

“We recommend that the following three issues that are of concern to industry be dealt with; namely retrospective application of the law, which appears to be unconstitutional; treatment of benefits prior to dollarisation; dismissal of employees due to misconduct. According to the new law, the dismissed employee is entitled to retrenchment,” he said.

Moyo said exports administration process must be shortened and costs minimised by setting up a one-stop shop for permits and licences.

He said there was need for government to prioritise the public private partnerships and special economic zones as they required urgent attention.

“Noting the importance of special economic zones/special incentives in stimulating local industry, CZI calls for expediting the formation and the legislation of Special Economic Zones,” he said.

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