Finance Minister Honourable Patrick Chinamasa has once again put unrealistic revenue projections into next year’s budget despite the reality on the ground which is dwindling revenues, high unemployment, virtually no capital expenditure (CAPEX) of note, company closures and drying up foreign direct investment (FDI). The optimistic Minister expects revenue to increase by 7% with the economy expected to grow by 1.7%. Why would Chinamasa believe revenues will be higher in 2017 when for 2016, inflows are expected to miss his 2016 budget by 9% or $280 million. Mind you this is coupled with an expenditure overrun of $520 million.
Lets looks at where the Minister believes he will be able to get more revenues from and anaylse how realistic the Minister is. Chinamasa simply hopes to have higher output of 12% in the agricultural sector backed by the command agriculture programme to which 34,000 maize farmers have been signed up for the 2016/17 season. Many analysts doubt this will yield the desired results given the heavy reliance on natural elements that Zimbabwean farmers have. In the modern world; it simply is not good enough to pray and wait for the rains to come; you need investments in water reservoirs, irrigation equipment among other key elements. He also hopes to have higher FDI at a time when the Minister of Indigenisation is busy looking at ways to exploit foreign owned companies to cough up levies into his Indigenisation Fund. As we have come to know in 2016; these funds are abused by the wolves who guard them given the $500,000 ZIMDEF scandal which no concrete action has been taken thus far.
What Chinamasa did not say is how he intends to fund his financing gap of $400 million. All the Minister hinted is he will not use Treasury Bills (TBs) to fund the gap as this might destabilise the financial sector which is currently overburdened with TBs. We hope he does not intend to finance the gap using his old usual ways of;
- Not paying local companies for products and services supplied as this has the same devastating ripple effect which has been dogging the nation since 2013.
- Simply underpaying ministries the allocated budget funds which will force government departments with regulatory/oversight functions to fend for themselves using vampire tactics similar to Zimbabwe Revenue Authority (ZIMRA) and Zimbabwe Republic Police (ZRP) take money tactics.
- Perhaps the rumoured $262 million loan from Standard Chartered Bank of England might be the answer that Uncle Pats is hoping will materialise to slightly help close the gap.