Zim finance minister slashes revenue projections |
| Published: 19/03/2009 |
Finance Minister Tendai Biti cut revenue projections for this year by almost half, as Zimbabwe’s new unity government struggles for cash and resources in the absence of external budgetary support. Biti also drastically slashed spending, telling Parliament in a budget revision statement that the economic outlook for Zimbabwe remained grim and that the new government had to embrace what he called “hunting economics” where it spends only that which it had collected in taxes and other revenue. The Finance Minister was however confident Zimbabwe would turn the corner to emerge from a decade of turmoil marked by an unprecedented recession, political and humanitarian crisis. "The outlook of our economic situation is still grim, but I have no doubt that we will be able to achieve the turnaround we require," he said. The initial budget announced by then acting finance minister Patrick Chinamasa forecasted two percent economic growth this year. Biti slashed the 2009 budget revenue estimate to $1 billion from $1.7 billion, as well as spending by the same margin. Biti said there was not much revenue coming from Zimbabwe’s collapsed economy where factories are operating way below 25 percent of capacity while unemployment was hovering above 90 percent. “Indirect taxes made up of customs and excise duty have contributed 88% of government revenue which means that the government has been literally sustained by beer and cigarettes. This is unacceptable,” Biti told Parliament. Once a model African economy Zimbabwe is suffering a severe economic and humanitarian crisis marked by the world’s highest inflation of more than 200 million percent, acute shortages of food and basic commodities, amid a cholera epidemic that has infected more than 90 000 people and more than 4 000 others. Analysts say the new unity government’s ability to restore Zimbabwe to its former regional breadbasket status hinges on whether it is able to raise significant financial support from rich Western countries that have however said they will not immediately help until they are convinced Mugabe is committed to genuinely sharing power with Tsvangirai. Western nations led by the United States and Britain – Zimbabwe’s two biggest donors – have also said they want Harare to submit a credible economic recovery programme and to implement genuine and comprehensive political and economic reforms before they can provide support. Mugabe is scheduled to launch a new emergency economic programme for Zimbabwe Thursday that Biti said would focus on the humanitarian situation and would also address issues to do with democratic, constitutional reforms and greater media and other freedoms demanded by Western powers. |
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