Zimbabwean Finance Minister Tendai Biti on Wednesday presented the maiden budget of the unity government installed last month in which he trimmed earlier revenue projections and slashed planned spending to propose a balanced budget.
In his presentation to parliament, Biti anticipated revenues of US$1 billion compared with some US$1.7 billion treasury inflows forecast in January by then-finance chief Patrick Chinamasa.
Biti proposed expenditures of US$1 billion, theoretically balancing the budget though this will require a substantial increase in government revenues from current levels. Revenues in February were only US$25 million, Biti said.
The finance minister, secretary general of the Movement for Democratic Change formation of Prime Minister Morgan Tsvangirai, noted that 88% of government revenues at present come from customs and excise duties on alcohol and tobacco, adding that "the government has been literally sustained by beer and cigarettes," a situation he called "unacceptable."
Biti kept Chinamasa’s optimistic growth calling for a 2% expansion of gross domestic product in 2009, which would require a rapid turnaround in the economy that has been contracting for the better part of a decade.
Biti said the government was not in a position to increase the US$100 monthly stipend to civil servants it instituted this month. "The outlook of our economic situation is still grim he said "but I have no doubt that we will be able to achieve the turnaround we require."
Economist Tony Hawkins, a University of Zimbabwe professor, told reporter Blessing Zulu of VOA's Studio 7 for Zimbabwe that the unity government’s first budget is based on fairly optimistic projections, but could benefit later in the year from an economic upturn.
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Note: This article corrects an earlier version which wronly stated projected spending as US$1.9 billion resulting in a deficit of US$900 million.