Zimbabwean Finance Minister Tendai Biti will have to dig deep to find a bright economic future for the country in his mid-year budget review, given the scarcity of foreign direct investment, mounting inflationary pressures, high interest rates, a scarcity of capital and and erratic electric power supplies crippling industry.
Economists said Biti’s hands are in effect tied, noting that President Robert Mugabe as he did Tuesday in a speech reopening Parliament has continued to attack the West and push investor-unfriendly policies.
Economist Eric Bloch said Biti may try to boost the economy through tax relief with a break for workers earning less than US$300 monthly. Economist Masimba Kuchera said he expects the finance minister to try to calm investor fears by guaranteeing foreign investments from seizure under the indigenization initiative.
The Zimbabwe Congress of Trade Unions for its part is calling for a pro-poor budget from the finance minister, calling on him to lower the tax rate for workers from 35 to 10 percent.
Economist Prosper Chitambara of the Labor and Economic Development Research Institute of Zimbabwe told reporter Jonga Kandemiiri that workers are taxed higher than corporations at 25 percent.