‘Mid-term budget need to tackle economic shocks’

16 Jul, 2020 - 00:07 0 Views
‘Mid-term budget need to tackle economic shocks’ Prof Mthuli Ncube

The Chronicle

Oliver Kazunga, Senior Business Reporter
FINANCE and Economic Development Minister Professor Mthuli Ncube will today present the Mid-Term fiscal policy statement with business leaders stressing the need to address the economic shocks inflicted by the Covid-19 pandemic and exchange rate volatility.

Zimbabwe’s economy like the rest of the globe has been adversely affected by the pandemic which has seen many countries enforcing lockdowns as part of measures to curb the spread of the pandemic.

The situation in Zimbabwe has been compounded by the drought which has resulted in shortages of raw materials to produce basic commodities. It is against this background that the private sector expects Government to come up with strategies to address some of these challenges that are not just threatening the viability of businesses but are also affecting consumers who are grappling with shortages and price increases.

Government has announced an ZW$18 billion stimulus package and ZW$1 billion of this amount will be channelled to industry.

Association for Business in Zimbabwe (Abuz) chief executive officer Mr Victor Nyoni said they expect the Finance Minister to announce how industry and business would access the facility.

“Industry would like the Finance Minister to clarify how companies can access the announced stimulus package. So far Abuz has engaged the Ministry of Industry and banks in Bulawayo with regard to this stimulus package.

“Ministry of industry office in Bulawayo has referred us to the banks.

“Banks have also told us they do not have information. It is our observation that despite good policies that get announced, their implementation lacks clarity,” he said.

Mr Nyoni said the combination of drought and the impact of Covid-19 pandemic has had negative impact on the business viability.

“Revenues have drastically gone down, companies are unable to meet their obligations. It is for this reason that we welcome the announcement of the Covid-19 stimulus package. “If administered correctly, it will go a long way in saving companies against imminent collapse.

“We, therefore, ask the minister to ensure the stimulus package is given the attention it deserves,” he said.

On the recently introduced Foreign Currency Auction System, he said bidding under the facility was presently being done by big companies who meet the minimum threshold of US$50 000 .

He said Abuz also looks forward to the decentralisation of the financial services sector to improve the ease of doing business taking into acoount that Bulawayo is an industrial hub.

“The RBZ office in Bulawayo must work with industry here in Bulawayo.

“Companies struggle to access foreign currency and the RBZ office in Bulawayo has not reached out to companies to work out a method that speaks to the needs of industry.”

A financial market analyst Mr George Nhepera said the presentation of the Mid-term budget today could be the time for Prof Ncube to come up with policies and measures aimed at stimulating growth of Gross Domestic Product (GDP).

“One way to do this could be proposing massive reduction in taxes directly linked to stimulation of demand for goods and services while at the same time boosting capacity of lending by financial institutionism,” he said.

Mr Nhepera said the country also needs to move with speed in developing and deepening capital markets by either re-opening the Zimbabwe Stock Exchange under well defined operational guidelines and modalities or go ahead with the establishment of the Victoria Falls Stock Exchange, which will allow trading of shares in foreign currency.

“We need international investors to help us rebuilt our country in key areas such as mining, agriculture and infrastructure development,” said Mr Nhepera.

He said Covid-19 and drought had largely contributed to the shrinking of the economy.

The Ministry of Finance and Economic Development has said it expects the economy to shrink by about 15 percent.

The Zimbabwe National Chamber of Commerce chairman for Matabeleland region Mr Golden Muoni said they were looking forward to strategies that stabilise the exchange rate.

“Obviously we want currency stability, the currency must be stable so that businesses are able to plan.

“We want a very clear policy direction because right now we don’t know for how long we are going to use this multi-curency system,” he said. — @okazunga.

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