Business people and economists offered mixed reactions on Wednesday to Zimbabwean Finance Minister Tendai Biti’s mid-term budget review with some economists calling it a non-event but industry leaders praising Biti's plan to expand credit to struggling firms.
Economist Eric Bloch said the mid-year fiscal policy review statement was somewhat disappointing as Biti did not go into much detail on how he’ll close the deficit gap which he projected at some US$700 million by year's end, other than to promise to slash foreign travel by government officials and scrub state payrolls of ghost workers.
“The minister gave a lot of statistical information ... but could not indicate any plans whatsoever to reduce expenditure or to minimize the deficit,” Bloch said.
Zimbabwe National Chamber of Commerce President Trust Chikohora said Biti’s US$40 million fund for distressed industries should help companies unable to finance locally.
Under the Distressed and Marginalized Areas Fund, the government and a local pension fund will each make US$20 million available, though details have yet to be finalized.
Chikohora said that some companies stand to benefit from the restoration of customs duties on commodities. “We hope our industries will be in a position to fully produce mealie-meal and cooking oil despite some of these challenges,” Chikohora said.
Economist Tony Hawkins said some of the problems that companies are highlighting are arising from production of poor quality goods, rather than a lack of credit.
Political commentator Roderick Fayayo said that despite Biti’s optimism about growth this year, economic risks are on the rise. “If friction among the governing parties continues this will derail economic recovery,” Fayayo cautioned.
Elsewhere, Biti and President Robert Mugabe are set to clash over proposals for Zimbabwe to join the South African rand zone.
Biti said the country will benefit from adopting the rand, but President Mugabe and hardliners in his ZANU-PF party say Zimbabwe should restore its own dollar, abandoned in 2009 after it became worthless, arguing that issues of sovereignty are at stake.