admingrowth target despite mounting inflation pressures and an ominous looming national budget deficit.
He also remained confident annual inflation will be contained below 4,5 percent by December in spite of the recent spate of basic goods price increases.
Addressing a Press briefing in the capital on Tuesday, the minister expressed concern on massive, irrational and unjustified increases in the prices of most basic commodities by businesses since reinstatement of duty in July.
As a result of the price increases inflation, which had been contained below 3 percent in the first quarter was gaining pace, peaking at 3,3 percent in July against 2,9 percent in May and June.
Import duty had been restored on selected commodities as Government felt they were now locally available and that there was need to protect local producers.
Imports from Sadc will attract duty as follows: maize meal 10 percent, flour 5-10 percent and cooking oil 15 percent. Similar items from non-Sadc states attract import duty of 10-15 percent for rice, maize meal 15 percent, flour 10-25 percent, cooking oil 40 percent and salt 5-15 percent.
This has resulted in a spate of price increases in the commodities.
Minister Biti said the irresponsible price hikes threatened to unsettle macro-economic stability and reverse the gains achieved thus far in that respect.
He also expressed strong reservations on ballooning Government expenditure after salary increases for civil servants saying this would affect spending in respect of health, education and key public infrastructure.
An inverse relationship between revenue and expenditure has already spawned the spectre of a US$700 million national budget deficit by December.
But despite the said challenges Minister Biti remained positive the projected end of year economic growth and inflation targets were still within reach.
“I have no doubt that we will be able to meet the growth rate of 9,3 percent, which in fact is understated. This is despite factors such as our politics, lack of fiscal space and slow implementation of reforms,” he said.
He said despite having the lowest inflation in Africa and some parts of the world business operators should not quickly forget the troubles of yesteryear.
In fact, it was such factors as renewed inflation pressures and lack of adequate fiscal space that constrained the potential for double digit growth.
The US$260 million salary increase for civil servants has taken the cumulative year-end wage bill to US$1,8 billion against a US$2,7 billion budget.
Minister Biti lamented the fact the expenditure represented 63 percent of the budget and 20 percent of Gross Domestic Product whereas the ratios should be 30 percent of budget and 7 to 8 percent with regards to GDP.
Treasury received US$205 million from the Zimbabwe Revenue Authority and US$23 million diamonds revenue from the Ministry of Mines and Mining Development bringing the sum total to US$228 million.
But expenditure totaled US$315 million a month leaving yawning a monthly expenditure deficit of US$86 million. At this level of consumption treasury needs monthly revenue in excess of US$400 million. This is almost double the amount that is being collected by Zimra every month.
“We are in a very precarious situation characterised by massive lack of fiscal space. And what it means is, we have agreed in our ministry that we will sit as budget allocation committee, we will prioritise the priority of priorities and we will be able to fund that,” said Minister Biti.
This means “there will be massive fiscal retrenchment” that will see priority given to health, education and public infrastructure as roads and water sources.
Online Reporter