What is the size of Zimbabwe’s economy? Finance Minister Patrick Chinamasa says it is $19 billion. Eddie Cross, an economist, says electronic transactions last year totalled nearly $180 billion, so the size of Zimbabwe’s economy is double that given by the minister and could be about $40 billion.
Below is in full contribution:
HON. CROSS: It is an honour to stand here today and start to debate in the House on this year’s budget. Your Committee of Finance has in fact consulted extensively inside the country on this issue. We held public consultations some months ago and then more recently, we met with all the key stakeholders in the economy.
The budget proposes measures to try and grow the economy of Zimbabwe. I think this is the key priority for the budget this year because there is no doubt about it that at the present levels of economic production in Zimbabwe, our budget is unable to meet our essential needs. Many allocations in the budget reflect that. The Minister’s efforts in this regard are welcome. The Committee expresses praise for the measures which he is proposing to take.
We also recognised that the Minister is trying to move away from business as usual and that this budget is an effort to try and start looking at our fiscal affairs in a new light and trying to engineer a situation which will put the country on a stable trajectory for growth and we welcome that. But, we must not underestimate the magnitude of our problems. The 2018 Budget remains highly consumption oriented. Seventy five percent (75%) of the revenue envisaged for 2018 will go to salaries. This is simply too much.
In addition to that Mr. Speaker, the budget deficit envisaged by the budget figures and the Committee is actually at variance with the Minister to some extend because we believe that the true budget deficit forecast is 1.9 billion dollars and not 700 million. The reason for that is that the figures that we have from the Blue Book do not tally in some respects with the figures he gave us in his Budget Statement. This is something that needs clarity. But I point out to the House that in 2016, the technical budget deficit of the country was 1.4 billion dollars. It can be reduced slightly to one billion dollars, we remove certain components in the budget deficit, but from a technical or fiscal stand point, the budget deficit in 2016 was US$1.4 billion. We believe that the budget deficit in 2017 will be closer to 2.2 billion than US$1.7. This constitutes a very substantial proportion of the GDP and it explains why we have a cash shortage. It is the key problem which confronts the Minister at this moment and time.
He has to get the monster of the budget deficit under control. He has to reduce it to a regionally acceptable level of about 3%. In his official budget statement, he makes that commitment to maintain budget deficit of US$700 million dollars but the Committee felt that this was not realistic. In fact, we expect that the budget deficit this year will be substantially greater than the forecast of the Minister if nothing is done about the issue of revenue.
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