‘Mid-term review should focus on reducing Govt expenditure’

Finance Minister Tendai Biti is expected to present the mid-term fiscal policy statement review next week.

The economic analysts said although the fiscal policy review needed to focus on the reduction of Government expenditure, Minister Biti would face a mammoth task in doing so considering that the bulk of the country’s revenue collections was going towards civil servants’ salaries.

“As Minister Biti presents the mid-term policy, it is key that he focuses on reducing Government expenditure. However, it will be difficult for him to do so considering that the bulk of the revenue collections is going towards civil servants’ salaries.

“Moreso, civil servants’ salaries cannot be cut as they are expecting a salary rise because currently their salaries are paltry,” said an economic commentator, Ms Chipo Warikandwa.

She said Government expenditure had also been worsened by ghost workers that were still receiving salaries from the public service.

“Government should seriously consider addressing the issue of ghost workers in order to reduce its expenditure.

“By now we thought the ghost workers’ scam would have been addressed but nothing much has been done to resolve the issue. At this stage when our economy is struggling, it will not be prudent for Minister Biti to reduce capital expenditure because that will mean stifling infrastructure development,” said Ms Warikandwa.

BancABC group economist Mr James Wadi said there was need to come up with policies that stimulate economic growth and development.

“In the mid-term fiscal policy review, Minister Biti needs to come up with measures that will address the current challenges facing the economy. Such challenges include liquidity crunch and power supply constraints,” he said.

He said the liquidity situation in the country was tight, resulting in banking institutions having limited space to lend.

Mr Wadi said Minister Biti should consider the resuscitation of functional money markets to ease the liquidity crisis.

“The functional money market can be revived through tradeable bills as well as restoring the central bank’s lender of last resort function,” he said, adding that Zimbabwe’s power authorities should work on securing dedicated power imports to improve electricity supply to stimulate productivity in the manufacturing sector.

He said the mid-term review should be centred on reducing Government expenditure but without tampering with measures that would also see capital expenditure being suppressed.

An economic commentator, Dr Eric Bloch, said Minister Biti should also prioritise the motivation of investors as well as attracting offshore credit lines.

“The mid-term policy review should focus on incentivising exports and also the balance of payments has to be raised to promote the growth and development of the country export sector. Mechanism should also be put in place to capacitate the Zimbabwe Revenue Authority to deal with the smuggling of products entering into the country, particularly those from the Far East,” he said.

Industrialists have expressed concern over the influx of cheap imported clothing and textile products that were entering into the country creating unfair competition on the market.