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Steps by the Government to attain primary fiscal surplus by 2016 are a welcome development if this can be achieved in the stipulated time. Achieving positive fiscal balance, expenditure rationalisation and revenue administration is a key area Government needs to tweak to achieve its targets.
Some of the specific actions Government is taking include, but are not limited to, reviewing the design of the tax system with a view to making it more business friendly and rationalising the civil service by removing duplications and redundancies.
All this is aimed at improving revenue or resource capacity to service national debt, deliver better social services and increase funding for critical social and infrastructure projects.
These measures are outlined in a letter of intent to the International Monetary Fund.
Finance and Economic Development Minister Patrick Chinamasa indicated Government’s commitment to improving the fiscal position.
He said the Government is considering a report by the Civil Service Commission containing proposals to streamline public sector employment.
These measures will see the Government improving capacity to spend the critical social services sectors and infrastructure.
It is heartening to see that Government is aware of what is critical to turnaround the economy. Government should be applauded for drafting a detailed roadmap towards revenue rationalisation although more is still to be done.
This is all the more important considering that its revenue base has been shrinking.
After identifying what needs to be done, it is critical that Government moves with speed to implement. Merely identifying the problems and not acting on them will not turnaround this economy. Government will need to move with speed to implement the identified strategies considering that only two months remain to the end of the year.
Achieving the set targets will not be easy, but the benefits to accrue from taking the bold measures are worth taking the pain for the desirous and prosperous economy.
Zimbabwe’s wage bill is currently around 80 percent of the total budget and this leaves very little room for revenue for other critical obligations. For years there has not been significant investment in infrastructure due to lack of resources. This has caused Zimbabwe to lag behind in terms of infrastructure development. Therefore starting the year having achieved a considerable amount of reforms will be critical. We believe that the measures Government is taking will improve economic performance.
But it is worth noting that revenue rationalisation is not the only measure that Government is seized with. Government is also seized with improving the doing business environment to create a friendly business environment. Government is also taking steps to transform the Zimbabwe Investment Authority into a full service Investment Promotion Authority from a simple licensing and facilitating board by the end of the year.
The transformation includes the operationalisation of the One Stop Shop investment centre including the appointment of a new board and an overhaul of the authority’s structure for it to effectively facilitate investment.
The banking sector has been cleaned up of non-performing loans to unlock resources to productive sectors. This will strengthen it to withstand local and international shocks.
The re-engagement drive is gathering momentum. It is important and Government must be applauded for taking note, that it is fundamentally important for Zimbabwe to be part of the global village to attract liquidity and foreign investment. Further, Government is working on improving national competitiveness of the domestic economy.
Only last week, Zimbabwe secured the endorsement of international bilateral and multilateral creditors for the debt resolution strategy.
The three International Finance Institutions (IFIs); namely the International Monetary Fund (IMF), the World Bank and African Development Bank (AfDB) supported Zimbabwe’s strategy to clear arrears by April next year.
They also agreed to help develop a new Comprehensive Country Financing Programme that attracts long term financing to promote growth and debt sustainability. The arrears clearance strategy was presented by Government last week at the IMF, World Bank annual meetings in Lima, Peru.
With all these internal and external developments, we have every reason to be buoyant that good times are around the corner.
We applaud Government for committing to these reforms that will see economic recovery and an improvement in living standards.
Online Reporter