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Prospects For National Budget Dim

THE delay in forming a government of national unity by the country’s three main political parties aimed at solving the political crisis and the adjournment of parliament is likely to affect the announcement of the national budget.

For the first time since Independence in 1980, the country was likely to go into a new year without the announcement of the national budget which is traditionally scheduled between the last week of November or first two weeks of December.
With the current hyperinflationary environment, some economic analysts were questioning  if it made sense to announce a national budget in Zimbabwe dollar terms at the rate the local currency was losing value against major currencies. International laws however do not allow Zimbabwe to present a national budget in US dollars.
Analysts who spoke to businessdigest said the delay in crafting and announcing the national budget which is a reflection of a country’s “health” was a recipe for a national disaster.
ZB Bank group economist Best Doroh said it was imperative to come up with a national budget under the current economic environment.
“We are not sure how government ministries would operate without these allocations, service delivery will further deteriorate and the absence of the national budget will make it difficult to come up with meaningful projections,” said Doroh.
In the absence of balance-of-payments support from multilateral institutions, Zimbabwe has been funding its budget since the turn of the century.
As revenue dwindles because of harsh economic conditions, expenditure has recorded an upward trend as government failed to live within its means. This has necessitated the need for supplementary budgets which are usually 10 times larger than the original budget because of inflation.
Political analyst Eldred Masunungure however said the budget had not been a key instrument in public policies for the past three years.
“It (budget) has been overtaken by other interventions like the quasi-fiscal activities by the Reserve Bank even if it is announced, it would be quickly consumed by inflation,” Masunungure said.
“It will not make sense to present a budget now because all it will be are figures on paper hard to put into practice. Two months down the line most ministries will have exhausted the money they would have been allocated,” he said.
National Constitutional Assembly chairperson, Lovemore Madhuku, said there were no consequences linked to the delay in announcing the budget because President Robert Mugabe and his allies have never been serious about planning.
“To them (government) the budget is just a legal process concerned with figures and not really about where the money is going to come from,” Madhuku said.
Analysts said poor allocation of funds or no funding at all leads to a whole lot of inflation drivers as Reserve Bank governor Gideon Gono had embarked on funding quasi-fiscal activities.
“The Reserve Bank has been funding all ministries through its quasi-fiscal activities which calls for more money printing, a move that is highly inflationary,” Madhuku said.
Some analysts however said announcing the national budget under the current economic environment was a non event because of the high inflation rate.
Kingdom Bank economic analyst Witness Chinyama said the absence of essential tools for the formulation of policies such as the national budget lead the economy to be run by piecemeal arrangements and crisis management methods.
By Jeslyn Dendere

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