Analysts describe finance minister’s budget as a non-event

By Lance Guma
01 December 2006

Jokes are already doing the rounds in Harare that whichever planet finance minister Herbert Murerwa lives on, every suffering citizen would love to join him there. In yesterday’s budget Murerwa, who has been wallowing in the shadows of the reserve bank governor over policy matters, claimed Zimbabwe’s economy had turned a corner and predicted inflation would go down from the current 1070 percent to between 350 and 400 percent.

He also believes the agricultural sector will see a 9,4 percent growth while the mining sector would grow by 4,9 percent. Murerwa could just about be the only Zimbabwean who thinks the economy as a whole will grow by 1 percent in the next year. This years Z$24 trillion budget represents a 5000 percent increase from last year. Although the minister increased the tax-free threshold from Z$20 000 to Z$100 000 analysts say this is little relief to struggling workers who have had to contend with a much higher reduction in their disposable income.

Mufandaedza Hove, Secretary for Economics in the Tsvangirai MDC, described the budget as a ‘non-event.’ He told Newsreel that the finance minister was not the president and could do little to influence some of the key political decisions that need to be made in order to change things around. Hove said, ‘they fail to find evidence of growth forecasts against the backdrop of consistent decline in the gross domestic product (GDP).”

Amidst Murerwa’s bold declarations prices shot up in the country. Commuter fares are up from Z$400 to Z$500, soft drinks Z$500 to Z$800, beer Z$800 to Z$1100 and milk went up from Z$786 to Z$1129 per litre. The increases were wide ranging and included items like biscuits, sweets, orange juice, and baby foods. Hove conceded that Murerwa might have been trying to outshine Gideon Gono in presenting an optimistic budget and making subtle attacks on the reserve bank’s measures.