Zimbabweans are now used to failed promises. But they are still waiting for the 2006 national budget due to be unveiled next week with keen interest. No one will be expecting any miracles. But the pep talk will be necessary to keep them going.
Though hailed as the year of investment, 2005 has been one of the worst years for most Zimbabweans.
Inflation, which was down to 123 percent at one time, is now over 400 percent and could still go up.
Fuel that was readily available during the first quarter is nowhere to be found. When available it costs up to five times the official price.
The local currency which was trading at just over $5 000 to the greenback at the beginning of the year is now trading at over $60 000 on the official market. To make things worse, there is now an acute food shortage.
An economic bulletin on political risk and macroeconomic prospects in Southern Africa has even suggested that Zimbabwe is defying the law of gravity.
“It is difficult to comprehend how the economy has not totally collapsed by now,” the bulletin says. “Every conventional measure of economic performance is dire, and has been for several years, and living standards have regressed to levels not seen since independence in 1980.”
The bulletin says despite seven years of successive negative growth the business environment continues to deteriorate and there are no signs that the government is intending to carry out reforms needed to win international backing.
It says the situation is so bad that it is now increasingly getting difficult to actually pinpoint what exactly constitutes the Zimbabwean economy.
Zimbabwe’s leaders have demonstrated that they have little regard for the international community with President Robert Mugabe using every opportunity he gets an international platform to bash on British Prime Minister Tony Blair and United States President George Bush and urging Zimbabweans to look East.
Though the “Look East” policy is said to be paying off, there is nothing to show for it to the ordinary Zimbabwean whose average wage is now less than a quarter of the poverty datum line.
Political commentator John Makumbe said the Look East policy was not going to pay off because all the East was interested in was in selling goods to Zimbabwe and getting essential raw materials.
Zimbabwe was not likely to get any balance of payments support which was critical for the country to build up its foreign currency reserves and thus solve its three major problems, the shortages of foreign currency, fuel and food.
Zimbabwe National Chamber of Commerce president Luxon Zembe said, Finance Minister Herbert Murerwa was likely to come up with a good budget but this was likely to be derailed by politics.
“Politicians have let us down because some of them are benefitting from the present crisis. Look at the cars they are driving. They are likely to resist any change for the better and look at anybody who wants to change things as someone who wants to disadvantage them,” Zembe said.
The business sector is looking forward to a budget that will compliment central bank governor Gideon Gono’s monetary policy and remove market distortions such as price controls. They are also looking forward to a fiscal policy that will cut government expenditure and promote real investment.
Consumers on the other hand are looking forward to an increase in the tax-free threshold from the present $1.5 million. The Zimbabwe Congress of Trade Unions wanted the threshold pushed up to $9.6 million which was the poverty datum line at the time but this has since short up to nearly $13 million.
Bulawayo business consultant, Eric Bloch suggested that the threshold be set at a minimum of $6 million though $8 million would be more just.
Consumers will also be looking forward to a reduction of value added tax which was recently raised to 17.5 percent. But because of its appetite for spending without any alternative sources of revenue apart from taxing the dwindling tax base, Murerwa would be hard pressed.
Domestic debt has soared from $3.3 trillion on January 7 to $14.1 trillion on November 11, though at one stage it dropped to $2.3 trillion.