adminVictoria Falls Reporter
A TOTAL of 70 percent of the country’s national budget is going to less than three percent of the population a situation which was economically unsustainable, labour economist Dr Godfrey Kanyenze has said. In a presentation on Zimbabwe’s economic policy mix and the need to reform the economy at the Zimbabwe National Chamber of Commerce (ZNCC) annual congress in Victoria Falls last week, he said most of the national budget was mostly taken up by consumptive expenditure such as civil servants staff costs.
“As a country we are vulnerable, we have no resources and this is the position we are facing. We cannot sustain our economy because we are exporting everything and failing to do the basics.
“We have (an) unsustainable expenditure mixture. Government employment cost was at 45 percent and is now at 70 percent which is not developmental, it is not going to operations but just to pay them and so we have a serious problem” he said.
Dr Kanyenze said there was need for the Government to invest more in infrastructure.
“There is little that is left of our infrastructure. We need infrastructural development,” he said.
Dr Kanyenze said the country’s economic growth and investment figures that grew at tremendous pace on dollarisation in 2009 have been going down significantly.
He said the country’s inflation plunged to deflation then single figure rate, now way below 5 percent, revenues doubled from 16 percent of budget to 36 percent in 2012 while investment grew from 2 percent in 2008 to about 9 percent of GDP in 2011.
“The gross domestic product growth rate is moderating and that is a challenge. That rebound is moderating around 5 percent per annum,” he said.
Dr Kanyenze said the country needed about $2 billion for investment in development projects over the next five year period to ensure sustainable economic growth.
“At the turn of the century Zimbabwe’s GDP was actually negative. We had a slow down when commodity prices were actually strong,” he said.
“A number of economic indicators, despite the significant improvement since 2009, are still not commendable by international standards and this includes only 10 percent foreign exchange cover, which means Zimbabwe is vulnerable to unforeseen external shocks.”
He said Government should adopt active economic policies to address such issues as its $10,7 billion debt, structural bottlenecks in parastatals, regulation and supervision of banks, fiscal management and expenditure.
“The country has a debt of $10,7billion but the arrears account for 70 percent. The more we fail to settle to debts the more the arrears become,” he said.
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