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Oliver Kazunga, Senior Business Reporter

INTERNATIONAL investors are appreciative of the austerity measures being implemented by Government to facilitate economic turnaround, Industry and Commerce Minister, Nqobizitha Mangaliso Ndlovu, has said. 

The term ‘austerity’ has recently become topical across Zimbabwe as citizens grapple with belt-tightening experiences after Government instituted a number of fiscal and monetary policy reforms guided by the short term Transitional Stabilisation Programme (TSP).

The interventions, while meant to address the economy’s weaknesses and help boost investor confidence, have admittedly hit hard ordinary people. This has sparked an outcry as citizens feel the measures are bitter, although necessary. 

Speaking at the Employers’ Confederation of Zimbabwe (Emcoz) congress in Bulawayo last week, Minister Ndlovu said despite the challenging economic environment, the country still has higher investor interest. 

“When I say challenges, this is notwithstanding that it is only the Zimbabweans who seem not to appreciate the importance of fiscal and monetary consolidation that Government has taken. I interact with international investors worldwide, and you’d be amazed at how they are appreciating the austerity measures that are being taken both from the fiscal and monetary sides,” said Ndlovu. 

Austerity refers to an extreme form of “fiscal consolidation” where the growth in public spending is curtailed or taxes rise at a rate such that government’s budget deficit declines over time, but with the clear intent of reducing wages to improve economic competiveness. 

The 37th Emcoz annual congress, held under the theme, “managing turbulence for sustainable business: transition from multiple currency to a single currency economy”, also saw delegates discussing the impact of the austerity policies by Government.

Minister Ndlovu said Government has managed to cut its expenditure but much of the revenue was going towards social protection following the Cyclone El-Nino-induced drought Zimbabwe was experiencing.

“When you undertake austerity measures during a year of drought, when your power generation is severely affected, these have direct impact on both industry and agriculture.

“Industry and agriculture are severely affected with Government expenditure going to social protection,” he said. 

In the 2019 mid-term fiscal review, Finance and Economic Development Minister Professor Mthuli Ncube said the attainment of a fiscal surplus, combined with a current account balance of US$196 million during the first quarter from a deficit of US$491 million for the same period in 2018, signalled improved confidence in the TSP.

During the first half of 2019, monthly revenue collections performed above target of ZW$139,9 million to give cumulative revenues of ZW$4,99 billion, against a target of ZW$4,15 billion, giving a positive variance of 20,2 percent.

However, Government incurred unavoidable expenditures due to the Cyclone Idai disaster that swept through eastern Zimbabwe, spending ZW$4,2 billion against a target of ZW$3,7 billion, translating to 15 percent over-expenditure of ZW$532 million between January and June 2019.

The positive developments are coming out because the Second Republic chose to go austerity for now so that the country will enjoy the vast benefits ahead. — @okazunga