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Austerity budget calls for paradigm shift

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OVER the years, corrective measures to address fiscal indiscipline have been proffered and in a number of cases, Cabinet has embraced recommendations made, only for these to be arbitrarily reversed or ignored, reflective of lack of political will.
Presenting the 2018 National Budget statement last week, Finance and Economic Development Minister Patrick Chinamasa moved away from policy inconsistencies, reversals and hesitations of the past, and signalled a strong business ‘unusual approach’.
The national budget was presented under the banner: ‘Towards a New Economic Order’ and acknowledges that a decline in domestic and foreign investor confidence has led to a disappointing economic performance over recent years.
“Restoration of confidence in the economy, promotive of investment, production, employment creation and sustainable growth, development and poverty reduction will not be realised in such an environment,” noted Minister Chinamasa.
“The new economic order, therefore, gears towards restoring discipline, fostering a stronger culture of implementation, supported by political will.”
This had been Government’s major weaknesses, lack of implementation and policy inconsistencies.
Policy inconsistencies and contradictory statements from Government officials had made doing business in Zimbabwe a nightmare.
A policy is a declaration of an intention.
The country has been stymied by policy inconsistency, resulting in dwindling investment inflows which, according to the United Nations Conference on Trade and Development, has plummeted from US$545 million in 2014 to US$319 million last year.
Zimbabwe, despite boasting abundance in natural resources like gold, diamonds, coal, platinum, nickel, copper, and iron ore, has found the going tough in luring investors.
And last week, Minister Chinamasa talked of a paradigm shift in the way Zimbabwe does business and manage the economy, public enterprises and finances, and said the aim of the budget is ‘getting the economy speedily back on track’.
The country does not need rhetoric; it needs transformational change in order for the boom of the economy, opine economic analysts.
And the 2018 National Budget, it seems, was that ‘transformational change’.
It spelt the Indigenisation and Economic Empowerment Law in black and white.
Every investor without doubt, now knows that the indigenisation law of 51/49 threshold will be confined to only two minerals, diamonds and platinum.
“Previous omissions and commissions signalling policy reversals and conflicting policy pronouncements by different agencies of the same Government will no longer be allowed,” said Minister Chinamasa.
And the biggest headache for the Minister of Finance since 2013 was Government expenditure.
To many, it was one of the harshest budgets in a generation, as he slashed spending.
Minister Chinamasa proposed a cocktail of austerity measures to cut recurrent expenditure.
These included civil service and diplomatic staff rationalisation, a reduction in the size of the Executive, a cut in staff benefits and restrictions on travel.
President Emmerson Mnangagwa took the first steps towards a lean Government structure by reducing the number of Ministries to 21 from 27.
Minister Chinamasa said to reduce the Government wage bill, a freeze on recruitment would be implemented while staff over 65 years would be retired in line with existing policy.
He proposed the introduction of a voluntary retirement scheme, adding that redundant officers would be retired.
Minister Chinamasa said Cabinet had agreed to abolish youth officer posts in the Ministry of Youth, Indigenisation and Empowerment by transferring their roles and functions to ward development coordinators in the Ministry of Women, Gender and Community Development.
He said the move would cut the number of youth officers and ward development co-ordinators from
7 269 to 3 530, saving US$1,6 million per month (US$19,3 million per annum) in the process.
Minister Chinamasa said 528 members of the Public Service without requisite qualifications in terms of
Section 18 (4) e (ii) of the Public Service Regulations were being retired.
Government, he said, had reduced fuel benefits across the board and will also cut the number of people who benefitted from the personal vehicle scheme.
Permanent secretaries, commissioners and equivalent grades will now get one personal vehicle, while principal directors, directors and deputy directors and their equivalents will be under a vehicle loan scheme.
Too many grades in the Public Service were provided with vehicles as a condition of service every five years, with the vehicles being licenced, insured, serviced and repaired at Government expense.
“The total outstanding request for Condition of Service vehicles is now close to US$140 million, which the economy in its state cannot afford,” said Minister Chinamasa.
Government also proposed to reduce its diplomatic presence and introduce a ceiling on rentals for foreign missions.
Zimbabwe has 46 embassies and consulates, manned by both home-based and locally-recruited staff.
The embassies, according to Minister Chinamasa, needed around US$65 million annually, far above available capacity.
Measures to contain expenditures extended to review foreign business travel practices.
Experience has shown that Zimbabwe delegations to regional and international gatherings are large.
In this regard, Minister Chinamasa proposed strict reduction in the size of delegation to levels that are absolutely necessary and where there is a diplomatic presence, take advantage of this to realise representation in outside meetings.
Now that proposals have been made by the Minister of Finance, what is left is implementation of these measures.
It will take more than talk for Minister Chinamasa to convince people that this time around, things will be done differently.

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