admin
Presenting the mid-term budget this week, Finance Minister Tendai Biti announced that economic growth targets had been revised from 9,4 percent to 5,6 percent this year.
He also announced that this year’s budget had been reduced from $4 billion to $3,6 billion due to poor revenue performance.
Minister Biti said Government missed its revenue target by $244 million by end of June with the large chunk being shortfalls on diamond dividends of $229,3 million.
“The mid-term budget is more of a realistic budget given the challenges we are facing. The downward revision of economic growth targets was predictable given the economic environment we are operating under.
“The revision also points out that as a country, we cannot afford to have inward looking resource mobilisation approach as it does not prop up economic activity,” said BancABC group economist Mr James Wadi.
He said due to poor revenue performance, it was critical for Government to start looking at Foreign Direct Investment (FDI) to generate capital needed to restore productivity in industries to competitive levels.
“We are lacking the capital that we need. When I look at other regional countries like Zambia and Mozambique, they have been receiving FDIs in excess of $1 billion per year and that has gone a long way in ensuring that their industries are competitive,” he said.
“Because of low inflation being recorded in the country at the moment, Government is trying to take advantage of that to raise its revenue by increasing excise duty on fuel and be able to meet its expenditure. This is a positive step although inflation is likely to rise going forward,” he said.
Kingdom Financial Holdings Limited economist Mr Witness Chinyama said Minister Biti fine-tuned the original 2012 national budget as it had been revised downwards.
“By revising the budget downwards, it means that he (Minister Biti) noted that limited fiscal space continues to be there. In face of limited fiscal space such targets will not be met as FDIs are not coming through resulting in local industries being uncompetitive,” he said.
He said the revised budget was a positive development because the country could not wish for something that was not there.
“All the same, we are aware of our operating environment and we cannot wish for something that is not there. What is critical is for Government to come up with policies that instill growth of the economy,” he said.
Affirmative Action Group chief executive Dr Davison Gomo said: “The mid-term budget is a standstill statement; it is not exciting at all because instead of going forward, we are going backwards by revising downwards economic growth targets.”
He criticized the mid-term policy statement saying issues of corruption in the economy had not been tackled.
“Also the budget does not address the plight of the ordinary citizen,” he said.
Another economic commentator, Ms Chipo Warikandwa, said the mid-term fiscal review overlooked the agriculture sector as no funding was committed towards financing this year’s summer cropping season.
She said the agriculture sector was not being given priority as evidenced by partial payment of grain delivered to the Grain Marketing Board (GMB) in the last marketing season.
Minister Biti said the 2011/12 marketing season grain deliveries to the GMB for strategic grain reserves amounted to 223 303 tonnes and was valued at $66,3 million.
Online Reporter