Mthuli faces daunting task

CLOUDINE MATOLA AND TENDAIISHE NYAMUKUNDA

Finance Minister, Professor Mthuli Ncube, faces a difficult task ahead of him as he seeks to revive the faltering economy, which has encountered strong headwinds ahead of the Mid-term Budget review that is scheduled for next week, Business Times can report.

Multiple economists and other experts are pleading with Professor Ncube to address the debt crisis, contain government expenditure to create fiscal space, resolve the country’s economic woes and offer a number of significant reforms to get the country out of the doldrums.

Government has failed to implement reforms to ensure that the debt crisis is resolved. Failure to do so has resulted in the country finding it difficult to secure fresh capital from international lenders.

Zimbabwe is saddled with a debt of US$18bn with US$12.7bn   being external debt including liabilities on the central bank balance sheet that the Treasury has taken on. Domestic debt is estimated to be more than US$5bn, according to official data obtained from the Ministry of Finance ,Economic Development and Investment Promotion.

Economist Eddie Cross told Business Times that Professor Ncube should come up with measures to manage the debt crisis.

He said: “Apart from that, a debt statement I think is going to be particularly important this year because the national debt has increased and we need to know why. And we need to know how the Government prepares to manage the national debt.”

He added: “We also need to know  what the negative effects  of the changes in the tax system at the beginning of the year are as well as whether the  tax collections are up to scratch.”

Persistence Gwanyanya, another economist and member of the Monetary Policy Committee, stated that debt restructuring is necessary given the nation’s current financial difficulties.

“There may be a need to negotiate change or to restructure our debt, especially the short-term. We need that traction on debt restructuring in view of the fiscal constraints that we have currently.

The market may also be interested to know the long-term facilities that the government is arranging to support, especially infrastructure expenditure,” Gwanyanya said.

He also mentioned that there would probably be a budget deficit this year and that it is important to know how it will be  funded.

“There’s definitely going to be a budget deficit this year that we expected from the beginning. But what is more important now is how that is going to be funded. You also expect the budget to deal with the issue of the legal framework or the approval of the legality of the 50 /50 of payment of corporate taxes.

“So what we expect is, given the fiscal constraints occasioned by drought and the continued depressed commodity prices, there may be a need for alternative sources of revenue to complement the budget and to finance the deficit.

“And we want assurance from the fiscal authorities in respect of the judicious management of the fiscal. There is a need for continued improvement on expenditure management,” Gwanyanya said.

According to economic analyst Victor Boroma, given that the auditor general’s 2023 report demonstrates the misuse of taxpayer funds, he anticipates that the finance minister will come up with measures to deal with the procurement issues.

He continued by saying that financing for energy production is necessary, as is repowering small power plants.

“Going by the recent revelations in the AG reports, the government needs to cut procurement of luxury vehicles as it has turned out to be a corruption pit. There has to be a change in procurement as taxpayers are not getting any public services out of it. A significant portion of the budget has to go to funding energy generation or clearing hurdles to re-powering smaller power stations. Energy demand will double to over 3200MW by the end of 2025.

“Treasury needs to avail more funds to health care, especially on refurbishing facilities, procuring equipment and medicine. Our health care has been neglected,” he said.

Vince Musewe, yet another economist, suggested that Professor Ncube devise strategies to create jobs in the economy.

Zimbabwe National Chamber of Commerce (ZNCC) president Tapiwa Karoro weihed in saying:

“There is a need to continue efforts to reduce the country’s debt arrears in order to improve the country’s ongoing engagements with multilateral funders. Any further debt accumulation, if so necessary, be in line with the Public Debt Management Act,” he said.

According to Karoro, companies anticipate that the mid-term review would create a more hospitable business climate that promotes and maintains macroeconomic stability and economic growth.