Reactions to the 2014 budget

Chinamasa 3

Tendai Biti – Former finance minister and MDC-T secretary-general
The projected GDP growth rate for 2014 is unrealistic. The underlying projections that the economy will grow are false and fictitious.
The country is starved of capital hence the modest budget of $4 billion. The budget should have encouraged private capital to flow into Zimbabwe. There is no explanation how the budget is going to be funded given the fact that we already have a $130 million deficit on the 2013 budget as of the 30th of October.
It’s a fictional budget because it is going to be unfunded and that is very regrettable. The aspect of it being viciously anti-poor, trying to tax musicians, capital gains on high density suburbs on cessions is a disaster, it doesn’t work. It’s a clueless budget, celebrating mediocrity. You can’t say you now have a new economy that is informalised and celebrate that.
The $100 million he hopes to get for the informal sector should have gone to the formal sector to prevent deindustrialisation and unemployment in Zimbabwe. Taxing mobile phone transfers are all anti-poor and they are going to hit the poor very hard. The measure to recapitalise RBZ is fiction. In this economy, no one is going to give you $150 million to capitalise the Bank.
We tried it, it didn’t work. The lender of last resort to be meaningful in Zimbabwe given our liquidity challenges has to be a $1 billion dollars, so $100 million is a drop in the ocean.
Demonetisation will give people $2 to $3 and it doesn’t work, I tried it -  as long as you don’t have at least $50 billion.
SMP (the IMF’s staff monitored programme) – The challenge is that there are standards and undertakings you have to meet and you have to balance the book, he has just passed a budget that is unfunded. The SMP will fall by the  wayside because we are going to fail to meet the obligations under the SMP.

Simbaneuta Mudarikwa – ZANU-PF MP, Uzumba – Minister of State for provincial affairs, Mash East
It is a people oriented budget. It has the element of ZimAsset. Money to artisanal miners has never happened in the budget and it’s a positive development . Everybody is now a master of his own destiny supported by the government.

Eddie Cross – MDC-T MP, Bulawayo South
He  (Chinamasa) was being ambitious particularly on the agriculture side, the targets will not be achieved. I think he has not done any serious damage to the economy. What he has set out today we can achieve but he still needs to do more on the investment side, property rights – security of investments and indigenisation. Nobody will invest here if the government demands 51 percent, they will have to make concessions on that front. His move on the banking sector has been extremely important. Our immediate crisis is in the banking sector, we have six banks that are technically insolvent and another three banks which are in serious trouble, some of them big banks. His moves today will stabilise the banking sector and restore some confidence. Budget to interbank market and RBZ – It’s not enough but it’s a big step forward. It’s the most he could do, he is not fleshed with money. What he has done is very important.

Supa Mandiwanzira  Deputy Information Minister and MP for Nyanga North
It is cyclical that global prices go up and down and it is not envisaged that prices (global) will remain low. The budget is encouraging Zimbabweans to utilise their own resources and to beneficiate them. Under the current circumstances, under sanctions it is a very realistic budget. It is outlining incentives for those  who want to go into manufacturing and can benefit from duty exemptions on capital goods. Taxes- the purpose of every budget is to introduce new taxes, there is nothing unusual about it. You must also understand the minister took off a lot of taxes and introduced a few new ones. The expectation is that they (Zimra on collection of new taxes) may not be able to get all in one year, but certain revenues will be accruing to the treasury.

Ritesh Anand of Invictus Capital
Against the backdrop of a sharp decline in economic activity and tight liquidity, it is quite a progressive budget. It is also targeted at the mining sector and SMEs  but is weak on how to resuscitate industry and financial services. The $100m interbank facility is welcome but may not be enough and can be absorbed quickly in the tight liquidity situation. It’s a positive step but the question is always how far can that go. About the government assuming the RBZ debt, what does that actually mean, are the companies owed better or worse off because they are just moving from one line to the next. Overall, the budget is based on grassroots economics, but does not go far enough to restore investor confidence as it has no way forward to revive industry.

Clement Muguri, Gweru resident
Chinamasa’s proposal to securitise the country’s mineral wealth might be a move aimed at raising funds for treasury, I don’t think it is the ultimate solution to problems that our economy is facing. I’m a bit worried here because it seems like we are mortgaging our mineral resources. I think the minister should have outlined proper policies that attract foreign direct investment which is what’s lacking in the country. There are big players waiting on the sidelines and this could be a missed opportunity which the minister could have used to fine-tune our empowerment laws so that they do not intimidate potential investors. Unless we address utility challenges such as electricity and water as well as challenges to do with lines of credit our local industry will not grow.

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