Industry captains express budget review expectations

THE 2016 Mid-Term National Budget review should focus on stabilising the economy through reducing the fiscal deficit and honouring the Lima agreement to unlock new lines of credit to support growth, industry captains have said.

National focus will be on Finance and Economic Development Minister Patrick Chinamasa as he presents the mid-term fiscal policy statement tomorrow.

Tomorrow’s presentation comes at a time when the country is experiencing economic regression due to liquidity constraints and lack of the much-needed foreign direct investment to stimulate production in the manufacturing sector.

Poor yields in the wake of the El-Nino-induced drought have also dampened prospects for growth forcing a reduction of initial estimated growth projection of 2.7 percent this year. Confederation of Zimbabwe Industries (CZI) vice president Mr Sifelani Jabangwe said fiscal deficit and the external debt were choking the country from securing fresh capital injection to stimulate production in the manufacturing sector.

Zimbabwe owes an estimated $600 million to the African Development Bank, $110 million to the International Monetary Fund and $1 billion to the World Bank.

The country’s creditors accepted the country’s debt clearing strategy in Lima, Peru, last year where the IMF laid the debt clearance strategy in the first half of 2016.

Zimbabwe has missed the target and has up to the end of the month to fulfil the agreement.

“Focus should be on how the mid-term budget statement will reduce the fiscal deficit to unlock fresh lines of credit needed to support industries and other capital development projects,” said Mr Jabangwe.

“We also look forward to hearing an announcement regarding the settlement of the external debt considering that what the country promised to pay the IMF and other financiers in line with the Lima agreement is now due.”

He said industry was also looking forward to the Government announcing other support measures for industry in relation to the Statutory Instrument 64 of 2016, which controls imports of listed products.

“In view of the import control regulations such as SI 64/2016 meant to protect local industries from imports, we’re looking forward to other support mechanisms that will tighten screws on imports so that capacity utilisation in industry can actually go up to competitive levels across all sectors,” said Mr Jabangwe.

Due to interventions such as the Consignment Based Conformity Assessment (CBCA) programme and SI 64/2016, some companies in the food processing sector have increased capacity utilisation to about 85 percent as imports levels from that sector have come under control.

Buy Zimbabwe chief economist Mr Kipson Gundani said Minister Chinamasa was faced with a mammoth task of balancing revenue collection and cutting down on tax to give companies breathing space from high taxation.

In the past, concerns have been raised over high taxation rates on businesses as they scuttled efforts to stimulate industrial productivity.

The Zimbabwe National Chamber of Commerce (ZNCC) chief executive officer Mr Christopher Mugaga said: “Our position as ZNCC is that people should not look at the upcoming mid-term budget as a stimulant but as a stabiliser because there is no money in the economy.

“Secondly, there is a need for Minister Chinamasa to consider tax issues in the mid-term fiscal policy review. As business, we strongly feel the Government should not continue penalising companies that are struggling with heavy taxation penalties for non-remittance because that is promoting de-industrialisation”.

He said the Government should also do away with the setting up of a Special Economic Zones authority to oversee the implementation of the economic zones.

“There’s no point for the country to have a SEZs authority when we have got no money. Instead the Government should task the Zimbabwe Investment Authority to oversee the implementation of SEZs so that we save money,” said Mr Mugaga.

The Ministry of Finance has proposed the setting up of a board to manage affairs related to the roll out of SEZs.

The SEZs Bill was gazetted at the end of last year and has gone through first and second readings in Parliament.  — @okazunga