Finance and Economic Development Minister, Mthuli Ncube will once again hog limelight next week when he presents the 2020 national budget amid high expectations to mend a broken economy and fix government books off-balance.
Zimbabwe’s economy is at crossroads and more so the finance minister who is expected to decide the course to stir the economy in the face of such enormous challenges.
There will be plenty of boxes to tick for Mthuli mainly on how he will deal with rising inflation, lack of confidence in the local currency, solutions to the current energy and power crises and policies that will boost business and investor confidence.
Despite prior announcements that austerity is over, Mthuli will need to be clear on the way forward by creating an enabling environment that will give relief to citizens and businesses.
The World Banks projects Gross Domestic Product (GDP) for 2019 to contract by 7.5 percent by year end while extreme poverty is estimated to have risen from 29 percent in 2018 to 34 percent in 2019, an increase from 4.7 to 5.7 million people mainly because of economic contraction and the sharp rise in prices of food and basic commodities.
However, interventions to boost productive sectors such as mining, manufacturing and agriculture should be prominent in the budget as they add stimulus to the economy.
Economists say the Finance Minister should prioritize stabilizing the currency.
“Of great concern is the rapid depreciation of the local currency. If they don’t address the rapid depreciation of the local currency then we are back to where we started. This means the solution is not about increasing the civil servants salaries or those from the private sector like they are urging employers, the solution is bringing stability to the local currency first,” economic analyst, Pepukai Chivore said.
“Stability on the currency will only be brought by fixing the demand and supply issues. We have a lot of demand of USD over our currency because we basically import everything. We have little USD because we don’t export much so this is where we are. The budget should prioritize production,” added Chivore.
But there are other pressing issues which also need adequate attention if the budget can be meaningful.
In order to deal with depressed production, key enablers such as supply of electricity and water are sacrosanct to this economy.
Mining, manufacturing and agriculture sectors have been severely hit as operational costs have piled up owing to use of alternative sources of energy and water.
Mthuli will also need to be honest with his position regarding fiscal spending as evidence shows that there has been an upsurge in public spending beginning second quarter of 2019.
The supplementary budget presented in August witnessed a momentous increase in spending to counter the negative impacts of the drought, upward adjustment of wages and increase in social spending
However, Zimbabwe expects to leverage on its vast mineral resources going into the future as pronounced in its US$ 12 billion mining sector strategy by 2023.
In this regard, economically prudent interventions from this budget should give the much needed impetus towards this journey.