SUSAN NJANJI, Harare | Friday
ZIMBABWE’S government on Thursday unveiled the troubled nation’s 2002 annual budget, seen as clearly populist, and admitted it had failed to salvage the crumbling economy.
Zimbabwe’s finance minister Simba Makoni painted a bleak picture of Zimbabwe’s economy, predicting another year of economic depression.
The economy is expected to shrink 7,3% by the end of the year, against original estimates of 2,8%, and is projected to decline another 5,3% in 2002, Makoni said.
President Robert Mugabe last month declared an end to market reforms and a return to socialism ahead of presidential polls next year.
The budget increased spending on social services, especially in the areas of health care and education. At least 22,8% of total government spending will go to the social sector.
“It’s quite clearly populist and has no relevance to the problems the economy is facing,” said Tony Hawkins, a leading economist from the University of Zimbabwe.
The main opposition Movement for Democratic Change (MDC) called the spending plan a “no solutions budget” by a government which “has run out of ideas.”
Zimbabwe has suffered serious shortages of medicines due to a currency shortage making it difficult for the country to buy drugs from overseas.
The budget also provided for loans to revive failed businesses and to support struggling ones.
Tax breaks were given to people to buy bricks for housing, and income tax exemptions were expanded for the poorest Zimbabweans. Some 75% of Zimbabweans live in abject poverty.
But there was silence on defence spending, which traditionally takes the lion’s share of the budget, and nothing was said about stabilising the exchange rate in a country where the parallel market is thriving.
The government also failed to show how it plans to tackle inflation, currently at 86,3% compared to less than five percent in most of its trading partners.
“We are sitting at the bottom of the pile both in terms of the sub-Saharan African group as well as the SADC group” for economic growth, he said, referring to the 14-nation Southern Africa Development Community (SADC).
Major declines are expected in agriculture, with 12,2% negative growth, and tourism, which continues its downward spiral with 9,1% negative growth.
An often violent programme of land reform has seen some 8,8-million hectares of land being seized from whites and re-allocated to blacks in the past year.
Per capita, Zimbabwe’s gross domestic product dropped to 385 dollars in 2001, from 421 in 2000, Makoni said.
Foreign investment has dried up, exports have fallen, and inflation has risen to the point where Zimbabwe’s economy is now considered hyperinflationary, he said.
The weak economy has led to a backlog in building one million housing units in urban areas, Makoni said, even as Zimbabwe is suffering a brain drain of educated workers from the country, “robbing our country of skilled personnel.”
Arrears on Zimbabwe’s foreign debt have risen to 682-million US dollars, Makoni said. Most international lenders have cut off funding to Zimbabwe on concerns about governance issues.
Makoni said he hoped the current Commonwealth-led dialogue on land reforms with Zimbabwe would help bring in foreign currency as the country re-engages donors.
But he admitted the 390,2-billion Zimbabwe dollar (US$7 billion) budget was “difficult to produce.”
He described it as “only a modest second step in the long journey to recovery”, adding that it stretched Zimbabweans’ “resilience (…) to the limit.” – AFP
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