• by Ephraim Nsingo (harare)
• Friday, January 23, 2009
• Inter Press Service

In November 2007, Zimbabwe's then Minister of Finance, Samuel Mumbengegwi struggled through the reading of the 2008 budget, his tongue tripping over figures in the trillions and quadrillions of Zimbabwean. So embarrassed was Mumbengegwi that he even shied away from announcing the total budget figure of 7.84 quadrillion Zimbabwe dollars, then a record amount.

Now for the first time since independence, Zimbabwe has started a new year without a national budget.

'It is a mission impossible to make a budget under the current conditions,' said University of Zimbabwe business lecturer and economic commentator Tony Hawkins. 'The budget will be meaningless because there is a meaningless currency. In a situation where you do not have an effective government, like we do now, a budget will not make any difference.'

Despite the insistence by Reserve Bank of Zimbabwe (RBZ) governor Gideon Gono that the economy has not been dollarised, most Zimbabweans are now using either U.S. dollars or South African rand for their transactions.

'This is a sign of a collapsed economy,' says Hawkins. 'How much will the budget amount to in local currency? During the presentation of the last budget, the minister could not remember the numbers, imagine what will happen now.'

With a 100 trillion Zimbabwe dollar note now in circulation, Zimbabweans now have quintillions and sextillions in their accounts. Gono has over the past few months been introducing new notes almost every fortnight. This year's budget, if presented in local currency, would range in the millions of quintillions or sextillions.

Rodgers Matsikidze, a commercial lawyer based in Harare, told IPS that the government is now caught up between a rock and a hard place.

'The problem is that the budget would be exhausted the very day it would be tabled because of hyperinflation,' said Matsikidze. 'At the same time, there are no legal instruments to legalise the current government expenditures. Government is required by law to seek parliamentary approval for whatever expenditures, but this has not been the case.'

Acting Minister of Finance, Patrick Chinamasa said he was 'going to move a motion on the Finance Bill and the Appropriation Bill in Parliament very soon'. He would not give further details on the exact date of the presentation or the currency to be used.

But a top official in his Ministry, requesting anonymity, said it was 'unlikely the budget would be presented any time soon' because of the 'chaos associated with the current hyperinflationary environment'.

'The only logical way would be for the government to budget in US dollars on South African Rand,' said the official.

'The problem is, if they budget in foreign currency, that would effectively mean the economy has been dollarised and have a lot of implications. The best way out of this would be to continue in the current quasi-fiscal approach, led by the RBZ, until the constitution of the inclusive government. It is sad the ordinary person ill continue to suffer most.'

The official confirmed a 2009 budget was drafted last year, 'but the figures became meaningless even before the announcement'.

'We have spent the past few months changing figures, and it now seems the only way out is charging/BUDGETING in one of the stable currencies currently being used in the country. Hopes were every high that the inclusive government would be constituted by now, and put in place proper modalities to present a budget, but it looks like we will have to wait longer.'

Fambai Ngirande, the Advocacy and Public Policy manager for the National Association of Non Governmental Organisations (NANGO) told IPS said the delay in publishing a budget had left Zimbabwe 'sitting on a precarious time bomb', that could only be resolved through 'strong governmental efforts to revitalise social service delivery and activate social safety nets fail to materialise expeditiously'.

'It is the purpose of the budget to state how the government hopes to fund whatever expenditure it spells out. If there is need for international cooperation to meet some of the requirements, then the budget should state that,' added Ngirande.

Although NGOs were working hard to solve the current crisis, Ngirande said without a national budget, 'meeting the food, health and basic needs of more than half the country's population should clearly be the responsibility of the presently absent, people mandated and accountable government'.

An independent economic analyst, John Robertson, said 'the major crisis the country faces now is with the means of production, that have completely been destroyed'. He said the budget should prioritise salvaging the country's comatose economy.

Once the mainstay of the economy, agriculture has been taken a nosedive over the last decade. Government blames declining productivity on natural causes like drought and targeted sanctions against senior government figures. Independent analysts believe the collapse is a result of the government's fast track land reform programme that displaced most productive commercial farmers.

The export of tobacco, minerals and industrial products used to be pillars of the Zimbabwean economy. In the mid 1990s, Zimbabwe used to export hundreds of millions kilos of tobacco, contributing up to 25 percent of the country's foreign currency earnings.

This came to an end when government embarked on an often violent land reform programme at the beginning of the new millennium, displacing the majority of the close to 2,000 commercial farmers specialising in tobacco production. Last year, between 50 and 70 million kilos were harvested. The last significant tobacco harvest was in 2000 when 236 million kilos of tobacco was harvested.

Capacity utilisation in the manufacturing sector is now estimated to be below 10 percent due to low capitalisation and disproportionate exchange rates. Earnings from manufacturing exports fell by 75 percent between 2007 and 2008.

The mining sector has also been brought to its knees by the continued crisis. Several gold mines have closed and platinum and chrome mines suspended operations in the last quarter of the year on the back of depressed world market prices. This downward trend led to the suspension of Fidelity Refiners and Printers – the only official buyer and exporter of minerals in Zimbabwe - from the London Bullion Market Association due to below-par gold deliveries.

'Unless the means of production are addressed, there would be no budget to talk about. The budget can only be sustainable if there are put in place sustainable means of production. This can only be possible once the issue of governance has been addressed,' stressed Robertson.

The Parliament of Zimbabwe resumed sitting on Jan. 20. The new session started off with debate in the House of Assembly on the current crisis in the country, particularly the collapse of social services such as education and health. Legislators explored possibilities for tackling the current cholera outbreak, which aid agencies - working with the government - say has killed more than 2,000 people.

The new Parliamentary session was also expected to expedite debate on the proposed Constitutional Amendment No.19, which legalises the constitution of an envisaged inclusive government. Debate on the issue was however shelved after parties to an agreement that created it disagreed on some of its aspects. Southern Africa leaders meet next week to find a solution to the impasse.

© Inter Press Service (2009) — All Rights Reserved. Original source: Inter Press Service

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