We are going back to 2008: Hon. Cross

Extracted from Parliamentary Hansard 25/07/2017



First Order read: Adjourned debate on the motion on the 2016 Annual Budget Review and the 2017 Economic Outlook Statement.

Question again proposed.

HON. CROSS: The half yearly review of the performance of the Budget by the Minister last week was a very important occasion for the House. It gave us an opportunity to review what Government has been doing with our resources in the past six months. For me, the most important feature of the Budget was the very substantial budget deficit in 2016. At the beginning of 2016, we started out with an approved Budget which provided for a deficit in the Budget of $140m. The final outturn was $1.4bn. Mr Speaker Sir,  that is equivalent to 30 per cent of the Budget. I believe that the IMF guidelines provide for a maximum of 5 per cent. It points out to the fact that we are so far outside…

 THE HON. SPEAKER: Order! Hon. Member, I hesitate to send any Hon. Member outside. I repeat at the back there, can you hold your own and listen, please.

HON. CROSS: We are so far outside the parameters indicated to us by the IMF during the re-engagement process that I cannot help but come to the conclusion that this process is virtually dead.

Of great concern is that we started 2017 with a projected budget deficit of $400m and in fact, we now believe that it will exceed US$1, 6 billion.  This relates to a whole lot of unbudgeted expenditure, over expenditure in certain particular special areas.  Mr. Speaker we cannot go on spending money recklessly like this. In fact, this brings back memories of the situation in 2007/2008 when the Reserve Bank, using its unauthorised rights as a quasi-fiscal agency of Government, was printing money in order to finance a massive Government deficit and to try and keep the economy going.  The consequences of that were the total destruction of our Zimbabwe dollar, of all savings in the country for more than a hundred years and the closure of the majority of our industries.

Mr Speaker, whether we like it or not, we are going back to 2008.  The consequences are that, if we are not careful, we will face a similar collapse in the country if we do not heed warnings.  The question which we are faced with as a House is what do we do because the budget does not need tampering with, it needs major surgery?  We have to, we do not have any choice, and we have to reduce expenditure on salaries to lesser than  60% of our revenue.

Mr Speaker, that could be achieved quite easily by simply cancelling allowances to civil servants.  In fact, if we cancel the allowances to civil servants we could increase salaries.  The reality is that allowances are not taxed, and salaries are.  This could increase the tax revenue to the State and it would bring our expenditure on personnel down below the threshold of 60%.

Mr Speaker, in addition to this, we have to re-examine our priorities in terms of expenditure overall.  We have to recognise that we have to cut our suit to match our clothes.  This means that we have to recognise that our revenues have been running at about US$3, 5 billion and we have been spending US$4, 8 billion.  Expenditure this year could exceed US$5 billion and there is absolutely no growth in revenues.  So, in the Budget and Finance Committee of the House, we have been looking at the possibility of consolidating revenue into the Consolidated Revenue Fund, as required by the Constitution.  We have said on numerous occasions, that if we did that, it would increase revenues under the CRF to something like US$5 billion a year because we are currently allocating through these funds which are not consolidated into the CRF, about US$850 million a year.

In addition, for some four years now, we have pointed out that if you look at the customs revenue from our border posts, we are collecting less than 5% of our import and export trade in the form of customs duties.  Mr Speaker that is a ridiculous figure, and it points to massive leakages at the border posts on a scale which simply staggers the imagination.  Last year, we imported US$1, 4 billion worth of motor vehicles.  If you take the customs duty on that alone, it exceeds $600 million, more than double the total customs revenue on all trade.  This suggests to me Mr Speaker that we should be able to push our border revenue from US$384 million a year, to something approaching a billion, without affecting any other sectors of the Zimbabwean economy.

Such an exercise would boost our domestic manufacturing industry very substantially.  It would boost our agricultural industry because importers would be required to pay the full import duties on such imports.  By not paying attention to these elements, we have a catastrophe on our hands in terms of the fiscal situation.  The Minister did his best to put a brave face on this, but there is no doubt in my mind that what we have got now is simply not sustainable, even in a short term, and we have to do something urgently about this.

Accordingly, Mr Speaker Sir, the Finance Committee has asked the Parliamentary Budget Office to review the Minister’s statement and prepare a paper for us for consideration when we return to the House in September, which will give us some idea of the magnitude of this year’s public deficit and how it can be addressed.  I think when this paper comes to the House, we will have to consider it carefully and then make positive recommendations to the Minister and then ask the Minister to review what he is proposing for 2018.  I know the process has started, but I believe we have to take urgent action to correct matters in our fiscal affairs.

Another concern of mine with regards to the Minister’s statement is that he did not reveal to the House the full extent of our domestic borrowings.  He made no reference to the overdraft at the Reserve Bank or the debts which we are incurring in various parts of Government which are not reflected in his calculations of Treasury Bill liabilities.  I believe, Mr Speaker, that our domestic debt now approaches the extent of our external debt.

          THE HON. SPEAKER: Order, order! Hon. Chipanga, order!

          HON. MUNENGAMI: On a point of order! We do not even know what is happening because the Hon. Member is debating but everybody is just walking up and down…

          THE HON. SPEAKER: Hon. Chief Whip, can you put order in your house please! – [HON. MEMBERS: Inaudible interjections.] Order, order Hon. Cross.

HON. CROSS:  Thank you Mr. Speaker.  Mr. Speaker I believe there are two issues.  The question of the fiscal deficit and the growth in domestic borrowings are the two key issues we have to address in the budget discussion this year.  On the positive side, I just want to report to the House that yesterday I held a discussion with some young maize growers and learnt of four growers this season who have grown over 20 tonnes per hectare in maize production.  I just want to point out that that is a huge yield of maize and, in my view, shows what we can do as a country if we work together.  I thank you.

HON. NDUNA:  Thank you Mr. Speaker for giving me this opportunity to debate on the 2016 Annual Budget Review.  Mr. Speaker Sir, it is my thinking that to complement and augment the efforts of the Hon. Minister of Finance and Economic Development, we need to make sure that we review some Acts and legislation, in particular, the Mines and Minerals Act.  I think it is way overdue and we have been told that it is still coming, so that we can optimally know that we can go from 10 tonnes for the small scale miners, maybe to 28 tonnes as has been envisaged in this year.

The other issue that I want to touch on is the 2017 national budget theme that speaks to and about the domestic resource mobilisation and utilisation to couple it with the annual review process of the 2016 annual budget Mr. Speaker Sir – [HON. MEMBERS: Inaudible interjections.] –

THE HON. SPEAKER:  Order, order Hon. Wadyajena, please, may you now stop perambulating?  Hon. Nduna, you may proceed.

HON. NDUNA:  Thank you Mr. Speaker Sir, I was just trying to get the attention of the ICT people, so that they may increase the speaker volume a bit – [HON. MEMBERS: Inaudible interjections.] –

Mr. Speaker Sir, what I touched on in particular on the Mines and Minerals Act is very key, so that it can couple and augment the efforts of the Hon. Minister of Finance and Economic Development this year.  So that what occurred in 2016, as we review it, we can only look forward in terms of upping review generation from our own God given natural resources.  I see the efforts that the Hon. Minister of Mines and Mining Development is engaged in, in terms of capacitating the small scale miners.  It can only be augmented and bolstered by legislation, as long as it comes here and we repeal it to empower our formerly marginalised black majority.

The second issue that I want to touch on is the establishment of the Special Economic Zones, which Bill has gone through Parliament and been assented into an Act by His Excellency the President.  Now that we have a board in place, it is my fervent view that we can build up on that Act, use the Special Economic Zone Act as a springboard in order to enhance our economic benefit as a nation.  I am aware that one of the conditions, in particular, that I called for as the mover of this motion in this House in September of 2015, was 100% capital repatriation plus profits.  As long as we do not carry out business in these geographical locations, we cannot emancipate and revitalize our economy.  It is my clarion call that if there can be an expeditious establishment of these Special Economic Zones in the identified geographical locations, we can quickly economically benefit the nation and make sure that this so said $4.5 billion economy can go up to a $10.5 billion or even a $50 billion economy, as long as we put out policies in place and make sure that we follow up in terms of implementation.

The third issue that I want to speak about, which I should have coupled with the first one, is the issue of the 30 million raw chrome exports in terms of permission that it has been granted in Cabinet.  It would have been my view that if the Minister had said how much it is that we have exported to date and how much we still need to export in order to realise profit.  This is how we can benefit from our own God given natural resources.

As I conclude, the issue of ICT can really not be over-emphasized.  The Hon. Minister alluded on the need to embrace ICT in order to have a spike in revenue generation and to curb revenue leakages and illicit outflows.  So it is in that regard that I also urge him on in order to embrace ICT, to emancipate and augment the efforts of revitalizing our economy.  I thank you.


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