FINANCE minister Patrick Chinamasa has been in an invidious position ever since his appointment, making empty promises of an economic recovery and growth that never materialises.
BY MTHANDAZO NYONI
Chinamasa was appointed in 2013 in the aftermath of Zanu PF’s election victory, which had been predicated on yet-to-be fulfilled promises of growing the economy and creating over two million jobs within five years.
Ever since then, year-in year-out, Chinamasa presents a national budget with a brilliant set of economic growth targets but before the year ends, he would be revising those targets downwards.
For instance, in December 2013, Chinamasa projected that the economy would grow by 6,1% in 2014 — a prediction that was made despite the country’s failure to meet its economic targets in 2013, worsening macro-economic conditions and a disappearing manufacturing sector.
Halfway through the year, he was forced to eat humble pie and lower his ambitious growth projections to 3,1%. Even then, the 3,1% was still viewed as overly optimistic by the World Bank and MMC Capital, who then predicted economic growth of 1% and 1,5% respectively.
He lowered revenue projections to $3,6 billion from $3,99 billion while reducing expenditure to $4 billion from $4,11 billion because of the low performance of the economy.
This year, he again projected that the economy would grow by 3,2%, a figure he has already revised downwards to 1,5% following a poor agricultural season.
In his mid-term fiscal policy statement, Chinamasa set a target to reduce the wage bill to about 40% of the budget. However, six months down the line, he has not done so.
He also proposed a number of measures like banning of second-hand clothing to protect local industry but to date no Statutory Instrument to this effect has been issued.
In his 2016 national budget, Chinamasa set more optimistic economic projections, indicating that the country’s economic growth will be 2,7%, largely driven by agriculture and mining.
This represents almost double the projected growth from 1,5% this year.
He projected total revenues of $3,85 billion — a figure also under scrutiny taking into consideration an anticipated poor agricultural season combined with other factors.
“A GDP growth of 2,7% is near impossible and I believe the country can only do nothing more than 1%, especially considering that industrial capacity utilisation has been on a freefall from 57% in 2011 to 44% in 2012 and was standing at 39% in 2013 but is now at 36% and is ending the year at 30%,” said Butler Tambo, a Bulawayo-based policy analyst with the Public Policy Research Institute of Zimbabwe.
“We have already failed as a country to reach our own targets of GDP growth that we enunciated under ZimAsset [economic blueprint] because the blueprint had said the economy would grow by 6,1% in 2013 but we only managed 3,1% and it had said from 2015 onwards the economy would be growing by an average of 7,3%, but the figures above have already disputed the ZimAsset assumptions as fictitious.”
Economic analyst John Robertson said the promises of growth and improving tax revenues should not have been made, given the evidence that was delivered by company closures, falling employment, falling export commodity prices, falling consumer spending, worsening power cuts and tightening bank liquidity.
“For the coming year, all of these seem likely to become more serious as the downward momentum has grown stronger and now additional pressure is coming from the increasingly likely prospects of a threatening drought,” said Robertson.
The question then is why would Chinamasa be making such projections which are unrealistic, especially as he is privy to information on the ground, as well as the IMF and World Bank projections for the country? Could it be that he is simply a clueless, incompetent lawyer who was thrown at the deep end of financial and economic issues he has little understanding of?
An examination of his conduct and statements since his appointment, suggest that far from being a bungling clueless minister, Chinamasa is certainly aware of the daunting task ahead.
The projections he makes are more likely an indication of the pressures he is subjected to by his colleagues in the ruling party where posturing and political expediency take precedence over sound economic policies which could rescue Zimbabwe.
His position is in fact made the more untenable by President Robert Mugabe who has gone on to contradict him and reverse sound policies that make economic rather than political sense.
According to Robertson, Chinamasa “is certainly working under pressure to satisfy Zanu PF’s interests ahead of the 2018 elections, but he seems not to have been given the authority he has needed all along to remove the real barriers that have prevented economic recovery”.
Some of those barriers include the payment of unsustainable bonuses for civil servants in an economy which is not working. This is something Chinamasa is well aware of and in April he made the bold move to suspend these, only to face the full wrath of Mugabe who declared that civil servants would be paid their bonuses at all costs.
As further evidence of his awareness of the impediments to achieving recovery and growth, Chinamasa has also repeatedly raised concern over government’s huge wage bill, describing it as unsustainable, as it swallowed 83% of government revenue.
He has called for staff rationalisation including retrenching some civil servants as a way of containing the huge wage bill, but once again, he has encountered resistance from fellow government and party officials, including Public Service minister Prisca Mupfumira, whose arguments appear grounded in populism ahead of the 2018 elections.
Robertson said the systems that have been put in place do not work, but ruling party members are not supposed to make critical comments. While this continues, recovery will remain little more than a dream, Robertson said.
Analysts say Chinamasa is not a clueless minister but a victim of Zanu PF posturing ahead of the 2018 elections.