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EDITORIAL COMMENT: National Budget gives hope for economic turnaround

16 Nov, 2019 - 00:11 0 Views
EDITORIAL COMMENT: National Budget gives hope for economic turnaround Professor Mthuli Ncube

The Chronicle

Citizens will agree with us that indeed this year was one of austerity measures.  

Consistent with the Government commitment to reduce expenditure as a basis for future social and economic prosperity, all of us had to tighten our belts in response. But a year of belt-tightening is enough otherwise continuous tightening of belts would end up totally squeezing life out of all of us.

On Thursday, Finance and Economic Development Minister, Professor Mthuli Ncube, signaled the transition from “Austerity for Prosperity” to “Gearing for Higher Productivity, Growth and Job Creation” in the 2020 national budget he also determined was a “People’s Budget.”

“The reforms, centred on ‘Austerity for Prosperity’ were in no way a retribution, especially in view of the fact that our public finances were not balancing, following years of overspending,” he said. 

“To correct that, the New Dispensation had to put aside the notion of short cuts, magic solutions and free funds by strengthening fiscal discipline and tightening monetary policy in order to rebuild the economy. This primarily entailed switching priorities to sound and responsible fiscal spending, which placed the fiscus on the right path. And indeed, during the course of the year, specific milestones were made, particularly in sanitising public finances, implementation of structural reforms, infrastructure rehabilitation, social service delivery, among other achievements.”

The pro-people stance of the 2020 fiscal plan under which the people would have more disposable incomes and jobs and enjoy social safety nets in an environment of greater productivity, growth, competitiveness and exports as well as shared development is what we now need.  

Some of the specific pro-people proposals are a wider tax-free bonus of $5 000 from $1 000, 100 percent civil servants bonus on gross salaries, tax-free threshold of $2 000 from $700, value added tax reduction to 14,5 percent and provision of sanitary wear for girls from Grade 4 to Form 6. 

In addition, more than seven million people will be assisted with food up to March 2020 from a $5,2 billion package while the number of children benefiting from the Basic Education Assistance Module has been increased to 1,2 million.  

From the beginning of next year, the Government will stop subsidising maize and wheat procurement, a policy decision that is likely to result in higher prices of mealie meal and bread. Realising that not many of our people would be able to afford the projected higher prices of basic commodities, the Government will adopt a targeted subsidy approach to cushion the resource-poor.  

Yet another specially targeted subsidy that will excite the people is the expansion of the Zupco service next year. The service is reliable and affordable, saving hundreds of thousands of urban commuters from harassment by touts and extortionate fares normally charged by private transport operators.  

Typically, austerity measures make life tough for the public but for our people, they coincided with a very poor agricultural season that left millions in need of food aid, a cyclone that killed hundreds and destroyed infrastructure as well as livelihoods in two provinces and a huge electricity supply deficit. This means that we were doubly impacted, so to speak.  

A reprieve was therefore necessary.

We now pray that we have a decent agricultural season over the next four or five months and we are spared natural disasters.  A good rainfall season will boost the lifeline agriculture sector and mean more food on the table for the masses. There will be no need for the Government to spend money feeding the people. A good rainfall season will also mean improved electricity generation at the Kariba hydro plant, alleviating the power shortage.  There will be no need for the Government to spend scarce foreign currency to import electricity. Industry will benefit too from reliable power supply which enhances their production and reduces production costs.

In addition, we pray that the initiatives to be rolled out by the Government to set the economy on the growth path will, indeed, create jobs that pay better and result in greater wealth accumulation.

The national currency should continue being stable as it has been in recent weeks. Exports must grow so that the economy generates more foreign currency to be able to finance critical imports; critical imports not trinkets. We look forward to investment inflows intensifying next year too.  

President Mnangagwa and Prof Ncube have been telling us that the worst is over thus in the next few months, likely by March next year, the economy will begin to pick up. They both told us a few months ago that inflation should start slowing down by the end of this year. True to that prognosis, the local currency is holding against the US$, not only on the interbank market but also on the black market. As a result of that currency stability, prices have largely been stable as well.  

Zimbabweans look forward to an economic turnaround starting next year and better lives that a turnaround engenders.

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