Taking Stock Kudzanai Sharara
Living in Zimbabwe can be really frustrating especially when one has to contend with galloping prices and shortage of much needed commodities, chief among them fuel.
You constantly question the direction the economy is taking and no matter how optimistic you can be, sometimes you just get overwhelmed with the associated pressures.
For a country, that went through decades of economic ruin, it’s proving to be difficult to boost confidence. Every move the authorities make is questioned and is looked at with suspicion.
Finance and Economic Development Minister Mthuli Ncube is in the hot seat. He is the one expected to turnaround the economy, but unfortunately he is expected to do so without subjecting citizens to the associated pains.
This is despite that he has been honest and frank, from the start, that the country, if it is to recover and attain upper middle-income status by 2030, will have to go through austerity measures.
His Transitional Stabilisation Programme speaks to this: “Under the New Dispensation, the first Government of the Second Republic will be implementing austerity measures aimed at addressing fiscal and debt challenges for sustained macro-economic stability and growth.”
There can be no austerity without pain, but unfortunately many expected a picnic.
The measures, which without doubt, have caused untold suffering, have made Minister Ncube enemy number one to some. Nothing he says is believed or escape criticism, the latest one being the budget surplus that he has been highlighting.
To many, in parliament and on social media, saying the country has had a budget surplus since January is taboo. It’s something Minister Mthuli should keep to himself. It’s not an achievement when people are suffering.
The minister has tried to explain why it matters to him, and why it should matter to the nation to have a budget/fiscal surplus, but he has found few friends.
In parliament they asked him to clarify “how the people of Zimbabwe are benefiting from this surplus which he is always harping about”?
His answer to the question was as detailed as it could be.
“The benefits for the surplus are as follows; having a surplus stops growth in money supply which in the long run will contribute towards a stabilisation of inflation. Secondly, the surplus is being used to cushion civil servants in terms of higher wages . . . Thirdly, we are using the surplus for social protection programmes starting with Cyclone Idai . . . we are using the surplus for the usual social protection programmes such as the food programmes in both rural and urban areas. We are also supporting other social services such as BEAM in the education and also, the health sector. In addition to that, we are going to use the surplus for importing food . . . So it is being used in these areas.”
But few like the biblical verse “though hearing, they do not hear or understand”.
The basic understanding of what Minister Ncube mean by saying the country is recording a primary surplus is lost to many, let alone why it’s an important milestone to Prof Ncube and the nation.
Early this week, he tried to put the explanation into print.
“Government is finally earning more than it is spending. No deficit. Not even breaking even. But a real budget surplus for Zimbabwe. However, the question I keep hearing is “what does this surplus mean to us?”
He went on to highlight what the “surplus funds” have been used for.
Towards cyclone Idai, BEAM, health support, teaching and learning materials, student stipend support, school feeding, special needs education, among many other expenditure that could have remained uncatered for, had revenues not outperformed targets by $100 million in the first quarter of 2019 while expenditures were contained at $1,5 billion against a target of $1,7 billion, leading to a budget surplus of $443 million.
Why harp about it when the cost of living for everyone is deteriorating on a daily basis they still asked.
The reason can be traced back to the Transitional Stabilisation Programme, in which Prof Ncube identified fiscal deficit as the first challenge that needed resolving.
“The major challenge relates to the unsustainable and prolonged fiscal deficits that perpetuate uncontrolled domestic borrowing, and feeding into vulnerabilities for the financial sector and the rest of the economy, and thereby, posing macro-economic instability.”
“The TSP therefore, first and foremost, targets strengthening fiscal responsibility and management of Government expenditures in order to create an appropriate environment for increased Budget development expenditures that enable and enhance the economy’s overall productive activities,” reads the TSP.
At the inception of the TSP, no one, even the Minister, would have imagined being able to not only reduce the budget deficit, or break even/balance the budget, let alone achieving a surplus in the shortest of time.
Achieving a fiscal surplus, at the first attempt, speaks volumes about the TSP plans that have been put in place, which even the IMF have commended and is happy to work with through the Staff Monitored Programme.
Prof Ncube has tamed his number one enemy, let be harp away.