To make matters worse, in 2017 at the Mid Term Review when the Minister of Finance and Economic Development came and reported to the House on his half term results, he forecast that the budget deficit was going to rise to about $800m. He had planned $400m. In fact, since that review was presented to the House, the Ministry of Finance and Economic Development has discovered another $1.2bn worth of expenditure by line ministries which has not been accounted for. That raises our half year deficit to $1.4bn. At the same time, he retained the forecast of income at $3.8 billion, I do not believe he is going to achieve about $3.8 billion, I think he is going to achieve $3.7billion. This means also that his expenditure this year is going to exceed $6bn. This could give us a budget deficit of $2.3bn or $2.4 billion.
These numbers are just extraordinary in economic terms. We have to ask ourselves, how we have been financing this massive deficit in state expenditure? The answer is, we have been printing money. We have gone back to 2008. We are printing money recklessly. I received my MP salary on 4th October, 2017. It was paid into my bank account at Stanbic Bank and I have been drawing down on those resources from my bank. What arrived in my account was not US dollars, it was an animal we call RTGS dollars. It is money created electronically. If you add that sort of money to the other forms of money – when the Minister was here last week, he told us how massively the electronic transfer of money has grown in the last four years. It is amazing how we have switched from cash and cheques to this electronic form of transacting business.
The other forms of cash which we have been creating are things like Treasury Bills and debentures. When the Minister settled the debts of Hwange Colliery the other day, he gave them debentures. I have not seen the debenture terms but I understand it is ten years without interest. That is printing money. It is printing money recklessly because it bears no relation to our production as a country. If these forms of money are not supported by productivity or real growth, then the result is going to be inflation. I am not at all surprised that as we speak today there is a substantial premium on real money. The premium is anything from 50% to 70%. If I was a businessman in Zimbabwe with money tied up in Zimbabwe, and I want to tell you that there are a billions of dollars locked into our banking system which cannot find any outlet.
I talked to a manufacturer in South Africa the other day who exported fertilizer to Zimbabwe last year for the Command Agriculture Programme. He was owed $70m by the Government. They paid him in RTGS dollars. The money is sitting here in a bank account and he cannot get the money back to South Africa because he cannot convert that money into real cash. If he was to take that $70m and try to export it through the stock market, he would have to buy either PPC shares which are fungible or Old Mutual shares. If he bought Old Mutual, he would lose 70% of the value of his money. You cannot run a country like that. That is simple fiscal delinquency on a massive scale.
Continued next page
(415 VIEWS)
0 Comments