MDC-T Shadow Minister of Finance says Zimbabwe should adopt Rand to get out of current cash crisis

I go to poor revenue performance.  According to ZIMRA and I am depending on the official statistics released by ZIMRA on the revenue collection, ZIMRA is complaining that out of a revenue target of US$861 million in the first quarter of 2016, they were only able to collect US$724 million.  So, again reinforcing the issue of poor revenue performance,  ZIMRA’s tax debt has risen from US$1.9 billion in 2015 to US$2.5 billion in 2016.  That is the tax debt which is a total amount of revenue ZIMRA is owed by Government, parastatals, public utilities and private companies.  It is a lot of money which cannot be collected and that is affecting Government cash flows.

If you look at the table, you can see the variance between actual revenue targets and what was collected and the variance which is in red which shows you that on all revenue heads from individual tax, excise duty, VAT, customs duty, withholding tax dividends, Government has not been meeting its revenue targets.  So, that is why there is a variance of US$136 million since January this year.

I go to illicit financial flows.  Mr. Speaker Sir, a lot of money is going out of the country, is being smuggled out of the country.  One typical example is the US$15 billion which the President highlighted.  It is not a secret.  It is money that should be in our banking system.  It is money that should be in our financial sector, but it is going out and I also blame most of our Chinese investors, with due respect.  If we were going to carry out an exercise of how many Chinese investors are in the country and how many have got bank accounts, you would be shocked.  Where is the money going?  It is going outside the country.

The other problem is that because Zimbabwe is the only dollarised country in Africa, it had become a source of foreign currency for most countries in the region.  If a person came from Malawi or Zambia with a visa card, you just go to any Zimbabwean ATM and withdraw your money and you go back to Malawi, you go back to Mozambique.  So, we had become a source of supply of foreign currency to the region.  So that also affected our cash flow position in the bank.

The other fifth problem is our trade deficit or weakening Rand.  Madam Speaker, if you look at that table, look at the trade balance which is the relationship between your imports and your exports.  In 2012 our trade balance was a negative minus US$2 billion.  It means we were importing more than we exported.  In 2013, our trade balance was now minus US$3.1 billion, in 2014 minus US$2.7 billion and in 2015 our trade balance stood at minus US$3.1 billion.  So, it means we are using our money taking it out to buy imports and some of that money is not coming back for sure.  Therefore, we have to address this gap between our exports and imports as a matter of urgency.  The solution is not banning imports; I think that is why I differ with Government on the quantitative ban or restricting imports per se.  What Government should have done is just to raise duty on the products so that those who cannot afford will switch to domestic products.  Raising duty was going to assist us because Government was going to get revenue and more employment but a quantitative ban can trigger, in terms of SADC Trade Protocols and other trade agreements, it can trigger retaliation.  I am happy that Government is engaging South Africans and other trading partners to try to sort out this issue before it ignites a regional trade war.  Imagine if each country starts to restrict imports, it can hit us where it hurts most.

Continued next page

(228 VIEWS)