By Tererai Karimakwenda
July 14, 2010
Finance Minister Tendai Biti on Wednesday presented his 2010 Mid-Term Fiscal Policy Review Statement, in which he announced that he will not propose a supplementary budget and that Zimbabwe’s economic future now hinges on the sale of diamonds from the Marange fields.
Biti announced that the 2010 National Budget anticipated revenues of $1,4 billion, but had fallen far short of that figure. The Minister said it is the first time in many years that government will not be introducing a supplementary budget because “we are not going to be getting additional revenue from the taxpayer".
Biti added: "We have to refocus the economy back to a path of stability by introducing serious fiscal disciplinary measures, like eating what we would have killed. I know some of the measures are going to be unpalatable, but that is what we are going to do.”
Economist Tony Hawkins described Biti’s policy review as “conservative” and the changes as “minor”, saying nothing much would change. Hawkins pointed to some small changes to duties which he said would help the manufacturing industry to continue its recovery.
He said the main longer term issue Biti raised is the taxation of the mining sector, in particular the revenue from the diamonds coming from Marange diamond fields. But Hawkins believes there needs to be more openness about the value of the diamonds and the amount discovered, before deciding whether their sale would help the economy.
Asked whether Biti’s policy review would improve the environment for doing business the economist said: “To be fair I don’t think there is much he can do. He is a pretty powerless minister in the sense that he is in a coalition government that is deeply split on political grounds.”
In a statement released on Tuesday the MDC had demanded from Biti’s ministry what it described as a “people-orientated, pro-poor, pro-growth” fiscal policy that would deal with inflationary pressures.
The MDC also called for transparency in the mining and sale of diamonds at the Chiadzwa fields in Marange. The party statement said: “We hope the Minister will come clean on the independent diamond verification and valuation and to state how much the State expects to gain in monetary terms so as to bring back people’s confidence on the diamonds sales.”
The MDC statement added; “The new measures must enable the majority of Zimbabweans to afford basics services such as power, food, health and education. The MDC hopes the minister will announce measures that will protect the majority of the country’s workers most of whom have no decent pay while at the same time reviewing the salaries of all civil servants who are struggling to make ends meet.”
In addition, last Wednesday the International Monetary Fund (IMF) published a staff paper that said Zimbabwe’s debt is so heavy it cannot be resolved, even if government adopted the right economic policies and increased mineral extraction.
According to the paper only debt relief can save Zimbabwe’s economy, with foreign debts of about 6 billion dollars and approaching 151 percent of the country’s gross domestic product within the next 5 years.
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