Most Zimbabweans say Finance Minister Patrick Chinamasa is unlikely to present a pro-poor 2015 national budget tomorrow due to tight fiscal space as the country is currently experiencing diminishing revenues due to lack of foreign direct investment and related issues.
Economists and Zanu PF activists who spoke to Studio 7, said the minister has little room to increase taxes to boost revenues owing to the poor performance of industries that are experiencing low production levels hovering at just over 30 percent.
They said Chinamasa may make marginal tax increases in beer and cigarette imports in an effort to increase the revenue base. Almost 80 percent of the current $4.4 billion budget caters for the government wage bill.
Chinamasa projected in 2013 that the Zimbabwe economy will grow by 6 percent, a figure that has been downgraded by the country and finance institutions like the International Monetary Fund to just over 2.5 percent.
The IMF indicated recently that conditions remain difficult in Zimbabwe due to liquidity constraints and inconsistent investment policies.
Independent economist Anthony Hawkins says Chinamasa will face serious problems in coming up with a pro-poor budget.
“There is very little room to maneuver, very little fiscal space, very little scope to raise taxes and with 8- to 90% of expenditure going on wages and government having already said it is not going to cut the wage bill in the short term, there is virtually no space to move at all.
“I think we are expecting some spending cuts and perhaps some minor tax increases but nothing will be dramatic,” said Hawkins.
Hawkins said the minister said Chinamasa needs to tackle indigenization policies in order to attract foreign direct investment.
Economic commentator Rejoice Ngwenya of the Liberal Market Solutions echoed the same sentiments, noting that the minister needs to trim the government wage bill to take care of other state needs.
Zanu PF activist Morris Ngwenya was also less optimistic about the minister’s capacity to present a pro-poor budget.
Ngwenya said the minister should allocate funds for small businesses, which benefit millions of Zimbabweans.