EDITORIAL COMMENT: Economy will rebound, let’s be patient

The Chronicle

THE Ministry of Finance and Economic Development has outlined the latest milestones Government has achieved in implementing reforms aimed at attaining an upper middle income economy by 2030. The first stage of the economic reform agenda — the Transitional Stabilisation Programme —has managed to stabilise the macro-economic environment in preparation for the second stage of the process — the First National Development Plan which will cover the period 2021-2025. 

The TSP is laying a foundation for sustainable and shared private sector-led growth while creating the necessary environment for investment. This entails strengthening governance and normalising international relations. Outlining progress on TSP reforms, the Minister of Finance and Economic Development, Professor Mthuli Ncube, said they were on course with notable milestones on fiscal consolidation, monetary policy restoration, liberalisation of the foreign exchange market, structural and governance reforms, re-engagement, investment promotion and support for the productive sectors. 

On Governance reforms, Prof Ncube said Government recognises the importance of transforming all governance systems including rule of law, freedoms of expression and association, respect for human and property rights, and zero tolerance to corruption. In that regard, notable progress had been made in aligning laws to the constitution. Of the 206 Acts which required alignment, 159 laws have been aligned while about 65 laws need to be aligned during the period 2019-20. 

Government has also successfully established and operationalised all Independent Constitutional Commissions mandated to promote good governance and these include the Zimbabwe Human Rights Commission, Gender Commission, Media Commission, Peace and Reconciliation Commission, Judiciary Service Commission, Electoral Commission, Anti-Corruption Commission, Land Commission and the National Prosecuting Authority. 

Treasury allocated funds to capacitate the commissions whose establishment has seen progress in fighting corruption with many cases now being dealt with by ZACC, robust systems for planning and executing elections as demonstrated during the 2018 Harmonised General Elections and reconciliation and bringing together of different political parties to discuss national issues, through the Political Actors Dialogue. 

Government has also approved the principles of the proposed Maintenance of Peace and Order Bill which is repealing the Public Order and Security Act (POSA) and by 3 September 2019, the Bill had gone through both houses of Parliament and is now awaiting Presidential assent.  In the same vein it is repealing the Access to Information and Protection of Privacy Act which will be replaced by the Zimbabwe Media Commission Act, the Freedom of Information Act and the Protection of Personal Information/Data Act. 

Cabinet approved the Freedom of Information Bill and the Broadcasting Services Amendment Bill on 15 May 2019. They were subsequently gazetted on 17 June 2019. The two bills seek to provide the right to freedom of expression and freedom of the media. The Zimbabwe Media Commission Bill was also gazetted on 9 August 2019 and will go through Parliamentary processes during the Second sitting of Parliament which started 1 October 2019. Government is reforming the police force in order to restore its appropriate mandate and enhance its effectiveness in ensuring the rule of law in the country. 

On fiscal consolidation, Treasury has successfully reined in expenditure, aggressively pursued revenue collection and done away with quasi-fiscal activities. Cost containment measures embarked on include an end to recourse to Central Bank financing including the overdraft, issuance of Treasury Bills only for budgeted expenditures, maintaining public wage bill at below 50% of total expenditures with adjustments linked to cost of living (COLA) parameters, rationalisation of posts and freeze on hiring, save for critical sectors/posts, enforcing Retirement Policy by retiring staff who have reached the retirement age of 65 years, those without the required qualifications and voluntary retirement; removal of duplications of posts in various ministries; and removal of a number of benefits, including personal issue vehicles and fuel allocations. In support of these measures, Government has implemented a flexible monetary policy aimed at stimulating productivity in the economy. 

It has done away with the multi-currency system and adopted a mono-currency. This was meant to restore domestic competitiveness and promote growth, remove price distortions in the foreign exchange market and improve export competitiveness through sale of export proceeds at market determined rates. 

Government has also established a Monetary Policy Committee and appointed a New RBZ Board. All these measures have resulted in a return of normalcy to the exchange market, with the exchange rate volatilities being reined in at an average exchange rate of 1USD:15 Z$. Government has also signed off on a Staff Monitored Programme (SMP) with the International Monetary Fund (IMF) to assist Zimbabwe implement key reforms as outlined in the TSP. This will allow the country to build a track record of sound economic policies as it seeks to re-engagement with the international community. 

The successful implementation of the SMP, in conjunction with key reforms in the TSP, will enhance development partners and creditors support while strong support from creditors will be crucial for the rapid implementation of a comprehensive arrears clearance and debt relief programme.  Other key milestones include the rehabilitation of infrastructure such as dams, power stations like Hwange and Kariba, roads, schools, rail, airports and hospitals. Going forward, Government says it will take advantage of positive strides made on stabilisation to consolidate and gradually exit from austerity measures by switching to reforms that emphasise on growth, productivity and prosperity objectives. 

Let’s be patient and give them time.