Biti in a fix

Finance minister Tendai Biti faces a herculean task of addressing the growing distress among the country’s civil servants and the stuttering economic recovery on the back of dwindling revenue inflows into Treasury.\r\n

Biti, who is next Wednesday expected to present his mid-term fiscal policy review, has to contend with failure to realise budget revenue targets set in November last year, attributed to the under-performance of the revenue from diamonds.

As a result, he has already indicated he would revise downwards the 2012 National Budget targets. He said failure by Anjin, a local diamond mining firm, to pay proceeds from diamond sales to Treasury would impact negatively on the $4 billion National Budget where $600 million was expected from the sale of the precious mineral.

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Being the head of the exchequer, Biti is currently under pressure from agitated public servants who recently issued an ultimatum calling for a salary increase.

His submission to this demand could further squeeze the fiscal space as the government has no alternative revenue sources due to limited foreign direct investment blamed on the country’s economic policies such as indigenisation laws.

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Official figures indicate that the government wage bill currently accounts for over 70% of monthly revenues.

Cumulatively, revenue collections as at March were off the mark by close to $100 million after $771,1 million was collected against a set target of $869,7 million.

Revenue from diamonds is said to have been a paltry $30,4 million against a target of $122,5 million.

Political and economic commentator Alexander Rusero said Biti was in a “catch-22 situation” as he also had to budget for the referendum and elections.

“Should we go for elections without food or have food without a vote? This is what people must consider. Biti is like a fire extinguisher,” he said.
He said while civil servants were demanding a salary increment, there was need for the minister to strike a balance with the demands by other key sectors such as health, education and the need for infrastructure development.

Turning to the performance of diamonds, Rusero said: “There has been a lot of politicking regarding diamonds. It has, however, dawned that revenue from diamonds cannot be the alpha and omega of Zimbabwe’s problems.”

Zimbabwe National Chamber of Commerce chief economist Kipson Gundani said: “The government has been operating with limited fiscal space since the formation of the inclusive government and what is worrisome is that there are no new revenue sources for Treasury.“The economy has stagnated and we expect a huge budget deficit this year because the government is the largest debtor to most utilities and other service providers.”

Biti — who is also facing increasing pressure from the country’s securocrats — last month told Parliament the Public Service Commission had recruited 10 000 staffers, among them 4 600 soldiers, between January and May this year without approval from Treasury.

The Home Affairs ministry is said to have employed an additional 1 200 personnel, a development critics say could be in preparation for the next general elections. In addition Treasury granted the employment of 24 000 temporary teachers up to May 2012. Biti, on the other hand, could upset the applecart by taking heed of the International Monetary Fund which is calling for more austerity measures as the economy continues to be run on a cash system basis in the absence of limited financial aid. Additional pressure on Treasury is also emanating from the failure of the maize crop during the past season.
According to official figures, of the 1,6 million hectares that were put under the staple crop, close to 500 000 hectares were written off as a result of prolonged dry spells, meaning the country will have to continue importing.

The under-performance of the agricultural sector, once regarded as the backbone of the economy, combined with rising global food prices, is also expected to exert more pressure on food inflation. – NewsDay