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Zimbabwe's 2011 Budget Angers Labor Groups, Empowerment Advocates

Secretary- general Wellington Chibhebhe of the Zimbabwe Congress of Trade Unions said Biti’s adjustment of tax-free income thresholds will not benefit workers.

Zimbabwe’s largest labor movement, economic empowerment advocates and civil servants have reacted angrily to Finance Minister Tendai Biti’s 2011 budget saying it does not meet their expectations.

Secretary- general Wellington Chibhebhe of the Zimbabwe Congress of Trade Unions said Biti’s adjustment of tax-free income thresholds will not benefit workers.

Chibhebhe said the majority of workers are next year expected to be still earning salaries that are far below the breadline.

Biti increased the tax-free income threshold from the current US$175 to US$225 and revised upwards the tax-free bonus threshold from US$400 to US$500.

He set aside US$1.4 billion for civil service remuneration, almost twice the US$773 million allocated in this year’s budget.

Affirmative Action Group president Supa Mandiwanzira said the budget does not cater for the nation’s indigenization program. “It is an insult for the minister to allocate only US$5 million for the indigenization program.”

Progressive Teachers Union of Zimbabwe president Takavafira Zhou said teachers, who are struggling to make ends meet, are angry that Biti’s budget proposal does not spell out any salary increases for them.

However, his Movement for Democratic Change formation led by Prime Minister Morgan Tsvangirai said the minister showed unparalleled leadership in the inclusive government with a presentation of a robust, well balanced and professionally crafted national budget that captures the party’s values and people-centered development thrust to pluck out Zimbabwe from three decades of economic ruin and policy confusion.

“The national budget, a brain child of Biti and a result of extensive consultations countrywide, reflects a radical departure of previous national financial plans and projections in that it emphasizes measurable growth targets, subjects itself to the needs of the poor, accepts and recognizes the central role of civil servants and demonstrates the MDC’s solidarity with the peasantry,” the party said.

It further said the minister "deserves national commendation for unbridled sensitivity to all Zimbabweans for a good piece of work and for mitigating the historical burden on a nation previously at the mercy of hyper-inflation, social iniquity and general political wickedness.

Meanwhile, Biti said Thursday diamond production in 2011 is expected to increase to 4 million carats compared to this year’s 2.7 million carats.

He said the first and second sales conducted in August and September 2010 generated gross proceeds of US$56.5 million and US$30 million respectively, bringing the total to US$85.3 million.

He said of this amount, accruals to government were US$30 million and US$11.9 million with the first tranche paid directly to central government and indirectly through the Zimbabwe Revenue Authority.

Biti said from the second sale, only US$8 million was remitted to government as dividend payment.

He said: “I have therefore requested that from the second auction of diamonds, payments of royalties, commission and value added tax on commission made to the Minerals Marketing Authority of Zimbabwe should be remitted to treasury”
He further said negative investor perceptions coupled with persistent liquidity challenges continued to subdue trading on the Zimbabwe Stock Exchange (ZSE).

The daily average number of shares traded declined from 14.5 million in January to 12.8 million shares by October 2010. The key industrial index fell from 156.52 points in January 2010 to 137.04 by September while the mining index dropped from 209.81 to 145.65.

However, Biti said, gains were realized in October when trading on the ZSE picked up on the back of profit taking towards the end of the year and also in response to better economic performance and positive outlook.

This saw industrials end October at 157.71 points while the mining index rose to 217.07 due to firming world market metal prices.

Biti also said during the budget consultation process, a number of stakeholders in the southern parts of the country raised concern over exchange cross rates being applied by most retail shops, particularly between the rand and the US dollar.

“In order to remove the rent seeking behavior by retailers, I am proposing exchange regulations which will compel all authorized dealers, including banks, shops and any commercial enterprise to display the daily applicable international cross rates for all prescribed currencies in a manner that is conspicuous to the public.”