Zimbabwe government spending a 'nightmare'

Government spending in Zimbabwe is a big concern while disunity regarding black empowerment is discouraging investment, Finance Minister Tendai Biti said on Thursday.

Biti briefed the media ahead of the 2012 budget he will present to Parliament in mid-November.

He said the government was on target to raise $2.7-billion in revenues but was struggling to put brakes on spending.

“It is the expenditure side that is a nightmare. There is need for a paradigm shift, that ... we have to live within our means,” Biti said.

The government is expected to run a budget deficit of $700-million this year. A July salary rise for state workers would require extra funding of $260-million.

‘This issue of jobs’
Government had spent $40-million on foreign travel by the end of August at a time the government owed farmers $35-million for maize delivered to the state grain agency.

Biti said the 2012 national budget would seek to grow the economy while creating jobs in a country where one in eight people are unemployed but added that the government was failing to contain spending.

The southern African country’s economy rebounded in 2009, emerging from a decade of recession thanks to the formation of a unity government between rivals President Robert Mugabe and Prime Minister Morgan Tsvangirai.

The growth has, however, not created jobs and poverty levels remain high as the country still grapples with shortages of clean water, electricity and ageing infrastructure.

“Our people want to be economically active so we are going to pay special attention to this issue of jobs in this budget,” Biti said.

Biti also said tension in the unity government was also clouding the economic outlook, adding that discord over an economic empowerment programme was discouraging investment.

Mugabe’s Zanu-PF party is behind the drive to force foreign-owned firms, including mines and banks, to surrender at least 51% shares in their local operations to black investors.

Tsvangirai has said the programme is scaring investors and is meant to benefit Mugabe’s allies.

Biti would also have to contend with scant aid flows as donors withhold funds crucial to boosting the economy.—Reuters

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