As it has done with reckless abandon since 2012, government will issue treasury bills, mop up cash from the domestic financial market and crowd out the productive sector, as Chinamasa himself admitted during his 2016 mid-term budget statement.
At the time, the Treasury chief had also warned about a runaway budget deficit as government was a third into $1.2 billion budget deficit for the year.
For a government which had virtually no domestic debt between 2009 and 2011, the explosion of local borrowings from around $300 million in 2012 to $3.7 billion by October 2016 is alarming.
The bulk of the debt is in the form of government paper which, according to central bank governor John Mangudya, currently stands at $2.1 billion.
Analysts have criticised the government for going into overdrive with its treasury bill issues, worsening a liquidity crisis that has hobbled the economy.
Not that government will listen to any advice to curb its appetite to spend, or institute the necessary reforms that will see it moving away from the current ridiculous situation where 97 cents out of every dollar the state raises go towards employment costs.
Last year, Mugabe’s Cabinet publicly rebuked Chinamasa for proposing 25 000 job cuts and suspending bonuses among other cost-reduction measures which he said would save $355 million over two years.
As Zimbabwe heads to next year’s election, government’s instinct will be to spend more, not less.
And, over the years, Mugabe has shown that he is not averse to making bold, costly promises to segments of the electorate he views integral to his electoral ambitions.
But there are limits to kicking the can down the road each time you’re faced with difficult decisions.
This is why Zimbabwe’s current path to financial ruin is worryingly familiar.
The economic meltdown which reached its peak in 2008 was the outcome of a series of poor decisions — price controls, unrestrained money printing — by a government which insists on turning economic orthodoxy on its head.- The Source
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