Zimbabwe Finance and Economic Development Minister, Mthuli Ncube, will tomorrow announce the ‘make or break’ 2019 budget expected to reshape the country’s economic trajectory and tame its spiraling foreign and domestic debt.
The budget, his first since he became Finance Minister, is expected to match his mantra on cutting down government expenditure and introducing a raft of austerity measures.
Coming in the backdrop of an imminent economic nosedive, the budget is expected to inspire confidence and address some burning economic ‘hot potatoes’, including monetary issues.
Several groups have expressed key issues the budget announcement should address including prioritizing health care, fiscal discipline and more support for the production sector among other issues.
In an interview with this publication, Association for Business in Zimbabwe (ABUZ) CEO, Victor Nyoni said businesses expect the Minister to sanitise the relationship between the Bond and the other currencies in use in Zimbabwe, the US dollar in particular.
He said the country cannot continue ignoring economic fundamentals if its fortunes are to be turned around.
This comes in light of the currency distortions which have been fingered as the major cause of the current economic crisis as the Bond continues to lose value against other currencies. Government has however remained adamant that the surrogate currency is at par with the greenback.
“The Minister needs to realise that we cannot turn around the economy on the basis of a lie that the rate between the USD and the Bond is 1:1. My hope is that the Minister will be honest to recognise that economically speaking, Bond is not equal to the USD. The economy requires more than just regulations to function well. Economic forces must be respected as well,” Nyoni said.
He also said businesses expect the 2019 budget to support productivity, boost export and enhance import substitution.
Nyoni stressed the need to come up with reforms in the mining sector to allow mining companies to retain more than 55 percent of foreign currency earnings to entice investors to come on board.
Currently, mining companies are getting 55 percent of their forex earnings.
They are on record complaining on government’s failure to give their due allocations, a factor which has affected gold production and forced some miners to halt their operations.
He also weighed in on the call for mineral beneficiation rather than exporting raw material as this will ensure that the country earns more from its minerals.
“The country is importing more than it is exporting. This therefore means there will always be a shortage of foreign currency. The minister must therefore come up with methods of increasing investment and productivity in the mining, agriculture and manufacturing sectors,” Nyoni revealed.
“Foreign currency retention by the mining sector must be increased beyond the current 55%. There is also need for the government to begin to seriously walk the talk on the subject of industrial beneficiation. There is no need to export raw materials that give us less foreign currency than we potential can get. The Minister’s fiscal policy must address the issue of beneficiation with better clarity.”
Residents also weighed in on the budget saying they expect it to prioritise education and health sectors.
“We need the budget to put more money to health. The health sector is collapsing, medicine is in short supply and most hospitals do not have the capacity to deal with emergencies as seen during the Cholera outbreak,” Monica Ncube, a resident from Bulawayo said.
Bright Mawere, a young innovator, queried why previous budgets allocated more funds to the Defence Ministry saying, under the ‘new dispensation’ funds should be channeled towards technology development.
“We need more money to support development and new innovations. This is the only way we are going to take this country into the future,” he said.