FINANCE and Economic Development Minister Patrick Chinamasa will this month present the 2016 mid-term national budget review statement amid expectations the fiscal policy will address cash shortages that have hit the country hard in the past six months.
Minister Chinamasa recently told journalists that discussions on the mid-term fiscal policy were underway, saying the document would be out by the end of July.
It is envisaged the forthcoming fiscal policy review would assess the impact of Government’s policies introduced in the 2016 national budget as well as come up with confidence-boosting measures.
The mid-term fiscal policy is expected to address the following:
Cash Shortages
Economic analysts said the mid-term statement should reflect the reality on the ground and avail measures aimed at tackling economic stagnation.
“The Government needs to look at how it can address the macro-economic pressures prevailing in the economy,” said Davison Vandira, an economic analyst.
“For instance, there are the cash shortages that have bedeviled the economy for the better half of the year.
“Also there is need to look at what they have achieved so far from the previous budget pronouncements and identify the macro-economic challenges that have resurfaced and come up with policies to harness these challenges.”
Since February, the country has been hard-hit by cash shortages.
Long queues at banks have become the order of the day with most banks reportedly limiting maximum withdrawals to US$100.
All the country’s 14 commercial banks disabled the ZimSwitch transacting system while most Automated Teller Machines (ATM) have been rendered useless.
The cash shortages have also affected Government as it has failed to pay civil servants on time.
Civil servants’ June salaries were staggered from June 27 to July 14.
Import restrictions
Other analysts said they expected Minister Chinamasa to reverse the import restrictions as they had hostile consequences.
An impasse between Zimbabwe and South Africa has been created at Beitbridge Border Post.
Protests broke out last Friday in Beitbridge against Government decision to limit the imports of South African goods.
On the other side of the border, South Africans, Indians and Ethiopians together with Zimbabweans marched from Messina, about 12 kilometers away, towards the border, but were stopped by police who promised to engage the Zimbabwe Government to resolve the issue. Government imposed strict new import regulation to protect the local industry but the restrictions adversely impacted on cross-border traders.
The import restrictions include products like bottled water, furniture, building materials, steel products, cereals, potato crisps and dairy products.
South African Minister of International Relations and Co-operation (DIRCO), Maite Nkoana-Mashabane, said they are doing their best to resolve the impasse.
Export growth
Another economic analyst, Tilda Sibanda, said the fiscal policy should focus on promoting growth of the export sector as well as creating an enabling environment to improve capacity utilisation.
For instance, currently the country’s exports are lower than imports and such a scenario creates a lot of discrepancies to the Gross Domestic Product (GDP). Total exports, which peaked in 2012 at US$3,9 billion, have been coming down year-on-year since then to US$2,7 billion in 2015.
Hence the Reserve Bank of Zimbabwe’s initiative of introducing Bond notes.
The Bond notes injection will offer five percent incentives for exporters to become more efficient and productive.
“Considering that exports are generally spread across the whole year, the injection of Bond notes, as long as they remain an export incentive, will be equally spread,” said Sibanda.
“Making the assumption that the exports will stagnate around the same levels as last year, the next one year will see an injection of about US$135 million worth of Bond notes into the economy, with the injection being spread over a year in line with export receipts.”
A lot is expected from this mid-term fiscal policy and it remains to be seen if these issues and challenges will be addressed.