…As minister resorts to supplementary in mid-term budget and economic review
Emmanuel Chitsika
The Zimbabwe Coalition on Debt and Development (ZIMCODD) says the supplementary budget presented last week by Minister of Finance and Economic Development Professor Mthuli Ncube marks an end to what they refer to as the ‘budget surplus hoax’ that has characterized his tenure as finance chief since appointment in 2018.
In a statement released on July 29, 2022, ZIMCODD said the mid-term budget and economic review is presented at a time the country is under siege from severe Zimbabwean dollar exchange rate depreciation against the United States Dollar.
“The year 2022 marks the end of Prof Ncube’s budget surplus hoax as he has tabled a Supplementary Budget for the first time since his appointment as Treasury chief in September 2018. The Treasury is requesting additional spending of ZW$ 929.9 trillion on top of the approved budget of ZW$ 969.3 billion putting spending projections for the January to December 2022 fiscal year at ZW$ 1.9 trillion.
“A supplementary budget was inevitable as ravaging ZW$ depreciation had significantly eroded the real value of the 2022 approved budget from US$ 8.4 billion (US$1: 115.42) in January to US$ 2.6 billion (US$1: 370.96) as of end of June. It is also worrisome to note that despite a tightening economy that has plunged 40 percent of the population into extreme poverty, a paltry 3.4 percent of ZW$ 929.3 billion additional spending is earmarked for social welfare,” read part of the ZIMCODD statement.
The statement went on to call for urgent address to the root causes of the problems while also expressing displeasure over the manner in which the gold coins issue has or is handled.
“It is our position that without addressing the root causes of current currency volatility, the announced supplementary budget is inadequate to keep citizens out of poverty.
“While the gold coins introduction is a noble idea, it only works efficiently in an economy where there is total respect for basic economic principles. However, by selling gold coins at an overvalued interbank rate (a gap of over 90 percent between official and parallel rates), government has introduced a huge arbitrage avenue that only enables the rich and few connected few to fatten their pockets at the expense of the poor majority.
“Zimbabwe, a net importer facing acute foreign currency shortages amid rising global inflation and ballooning cost of borrowing cannot afford to sell the precious yellow metal at a discount,” added the statement.
ZIMCODD presented a cast of measures which they feel the mid-term budget and economic review missed out and could have been incorporated.
“The mid-term budget and economic review failed to address the public’s expectations of some bold measures to cushion vulnerable groups, strengthen the ZW$ and subdue chronic price inflation.
“Closing leakages caused by corruption and illicit financial flows, reducing Reserve Bank of Zimbabwe interference in foreign exchange rate markets by completely floating the ZW$ exchange rate will help subdue burgeoning parallel market exchange premia while also liberalizing or doing away with the foreign currency auction system that is promoting rent seeking behaviors like selling foreign currency below its true market value,” said the statement.
The review comes barely two months after Prof Ncube sought parliamentary pardon following an unsanctioned spending by the treasury while he was on record declaring surpluses for the preceding years.
With all the declared surpluses signaling economic growth, the nation was surprised as to how the minister would preside over an overspending under such a boom.
