Zimbabwe Budget revised downwards by coalition Finance Minister

Zimbabwe Finance Minister Hon Tendai Biti:Budget revision is the easier part of the task. How to keep overspenders in check is the real deal

Zimbabwe coalition government Finance Minister Tendai Biti has presented a revised 2009 National budget to Parliament.

The revised budget is 43% down on the US1.9 billion budget presented by the Junta’s Acting Finance Minister Patrick Chinamasa in January 2009.

In mid February the coalition Finance Minister told Business Executives . in Harare that they should not plan on basis of the Junta Budget and the Reserve bank governor Dr Gideon Gono’s monetary statement but rather should wait for the revised budget.

He was echoed by Deputy Premier Professor Mutambara.

A stung Reserve bank governor Dr Gono hurriedly called for a press conference where he rubbished the Deputy Premier and the Finance minister’s calls as being illegal and of no consequence other than to cause alarm and despondency within the regional trade partners who had extended US$500 million lines of credit to the country on the strength of the Junta Budget Statement and Monetary policy.

In presenting the revised budget the Finance Minister disclosed that the Junta Budget was over ambitious and exaggerated in terms of its sources of funding given that the country had realised paltry revenues of US$55 million against the estimated US$280 million or US$140million per month the Junta Acting Finance Minister had sucked out of his thump.

Even then the new estimated annual revenue amounting to US$1 billion appears way out of reach for the impoverished nation as projection of February/March revenues indicate possible accrual of US$360million to at the most US$500 million meaning the budget revenue deficit will be about 50% to be financed from donations and or borrowing.

If Dr Gono was honest that US$500 million lines of credit were already guaranteed it means the Finance Minister is left with the task of revving up revenue collection capacities of the government to secure the US$500 million that cannot be borrowed or even exceed that to reduce the country’s ballooning indebtedness.

It appears that the projected sources of revenue available to the Junta may no longer be accessible to the coalition Treasury or alternatively the Junta was bent on borrowing to be financed by printing money and black racketeering.

It would be interesting to hear Chinamasa defend his budget position against the proposals by Biti as the appropriation votes come up for deliberation and approval by Parliament.

The downward revision of the budget is welcome in so far as it sets out to instil a sense of fiscal discipline in government to spend what it has earned than spend and borrow to cover deficits.

That is the challenge now awaiting the Finance Minister. Merely reducing estimates on paper without putting stringent controls on excessive expenditure and budget overruns is an exercise in futility.

There is a more compelling requirement for the Minister to tighten loopholes that in the past have been exploited by government departments to run up unauthorised expenditure exceeding the initial estimates they had tabled before Parliament.