The Finance Minister, Hon. Tendai Biti, had a challenging and unenviable task of balancing growth prospects and current expenditure requirements. A challenging task indeed given the difficuties in mobilising funds to finance the anticipated/projected budget deficit of USD810 million. One shudders to think wether multilateral and bilateral support from insitutions and donors will be mobilised to fund part of the budget let alone the deficit given revenue inflows of USD1.4 billion.
A balancing act of presenting a pro-poor budget and need to stimulate growth. There were good concessions and stimulus though, including a vote to women and youth empowerment, PAYE Relief and Bonus of USD400, reforms to VAT and corporate tax reduction to 25%, reduction on customs duty for small vehicles albeit at the expense of the local motor manufacturing and dealer industry.
The proposed reforms to tax legislation is welcome but one hopes that this will be supported by reforms to the companies Act which is long over due. There is however confidence that the budget is a starting point beyond which we expect in 2011 to have more allocations to Capital Expenditure so that a mimimum of at least 20% is allocated to infrustructure.
There is however little incentive for people in the dispora right now to come and invest as the investment climate is not yet condusive much weighing down on the GPA developments. The same applies to donors who are literally waiting on the sidelines to see how things will proceed going forward.
I think the hope factor will drive the country and a lot of optimism too. A lot of attention on the key economy enablers such as water, transport , and electricity will go a long way in ensuring (a) availability and (b) competitively priced energy and water inputs into the manufacturing process. Already the signing of BIPPA with South Africa as a positive indication and as remuneration levels are adjusted to the region, skills retention will ensure the much needed skills for the local industry.
Like Martin Luther said " I have a dream..." one hopes politicians will retain their political daggers and focus on reforms especially with a key focus on the legistlation reforms, public finance management systems, parastatal reforms and clear debt clearance strategy to ensure that we are on a clear path to recovery. I am not a proponent of having Zimbabwe as part of the Highly indebted Countries as the structural adjustment programmes that come with such designation can be disastrous. History is litterd with such failures!
As south africa prepares for the World Cup in 2010, one hopes as a country we will benefit from the positive spin offs from that country but both government and the local industry have been slow in strategic positioning to reap the benefits of this event or is it much left for a little late!
We will be judged by future generations by what we could have done better to heal the world and make it a better place.
Dony Mazingaizo has an interest in IFRS and Financial Management
