ZIMBABWE goes to the polls on Wednesday to choose a candidate with the keys to unlock the country’s problems, amid revelations the new administration immediately requires at least US$4 billion to meet the growing needs.
BY NDAMU SANDU
In his mid-term Fiscal policy review last week, Finance minister Tendai Biti painted a gloomy picture of the outlook, citing the expanded bureaucracy arising from the new Constitution which increased the number of MPs among others.
He said the government would inherit domestic arrears, would have to fund the education and health sector and source for resources to fund the 2013-2014 agricultural season.
“At least US$4 billion for doing immediate things would be required by the new government,” Biti said.
He said the new commitments would put pressure on Treasury, which has been collecting an average monthly revenue of US$290 million in the first half of the year.
“We have been collecting revenue of around US$290 million which has all largely been going to salaries and I suspect that come August 30, unless there is a fundamental change in the increase in our revenue, the issue of paying salaries is going to be a challenge,” Biti said.
“I reckon that the new government is going to require a salary buffer of US$1 billion, to avoid default on wages given the increase in the number of offices that have been created by the new Constitution.”
In the outlook, Biti cut the growth forecast to 3,4% this year from the initial 5%, weighed down by underperformance in agriculture and mining.
Biti said the country can get out of the challenges if it holds a credible, legitimate free and fair election.
“The chances of the international economy restoring confidence in us will be very high,” he said.
The run-up to Wednesday’s harmonised election has seen the economy virtually coming to a standstill or worse off looking into the post-election period.
The banking sector, which had withstood the heat in the absence of a functioning lender of last resort, has taken a knock, as big clients are withdrawing their money for safe havens such as Botswana or under the pillow saying the deposits would return after the elections, an executive said last week.
It is understood that banks that were working on the recapitalisation plans to meet the US$50 million deadline have been told by suitors to wait until after the elections.
“It’s really bad because people are taking their monies, even big depositors that would normally keep their money are taking it out,” an executive said.
The sector is going to take a further knock following government’s directive to local authorities that they write-off debts accrued by ratepayers since 2009.
This has left banks exposed, with Biti warning that seven institutions would fall as a result of the directive.
Confederation of Zimbabwe Industries (CZI) president, Charles Msipa told Standardbusiness last week the sector was praying for credible elections and the new administration should implement clear policies to attract capital inflows.
“We need capital inflows into the country that will be directed to a variety of sectors and infrastructure such as power generation, water supply, road and railway networks,” he said.
He said there was need for affordable long-term capital to allow industries to retool and finance operations.