The Sunday Mail
Martin Kadzere
Senior Reporter
Zimbabwe’s austerity measures — aimed at taking out the country from economic troubles including ballooning public debt — are expected to ease by year end when all fundamentals of the economy start looking better.
The widening of the tax base, alongside cuts in public expenditure, were part of tough fiscal policy measures introduced by the Government last October meant to allow for economic growth.
State revenues have started growing and since January this year, the Government has been reporting budget surpluses.
“We cannot go on and on, on austerity,” fiscal policy director in the Finance and Economic Development Ministry Pfungwa Kunaka said. “Austerity needs to be a very short period because people can only endure that kind of pain for a limited time.”
Mr Kunaka was speaking during presentation of insurance awards organised by Zimpapers’ outfits BoldAds and Business Weekly in Bulawayo on Wednesday.
Earlier, Finance and Economic Development Minister Prof Mthuli Ncube had told a business conference at the Zimbabwe International Trade Fair that it was inevitable to endure the pain under a period of “austerity for prosperity.”
“You will hear me use the word austerity less and less because we will start entering prosperity,” he said.
Some critics have blamed the Government over some of its painful but necessary economic reforms arguing it was being insensitive to the plight of the suffering Zimbabweans.
While acknowledging challenges facing the economy, including rising inflation, Mr Kunaka said indications were that the economy would start responding positively to the fiscal policy reforms.
Zimbabwe’s annual inflation accelerated to 66,8 percent in March 2019, gaining 7,4 percentage points on the February 2019 rate of 59,4 percent, driven by both food and non-food prices, according to Zimstats.
Monthly inflation, also gained 2,7 percentage points, from 1,67 percent in February 2019, to 4,4 percent in March 2019.
“We know things are difficult,” said Mr Kunaka.
The increase in the rate of inflation has severely eroded consumer spending as incomes and wages have largely remained stagnant.
“(But) take confidence from the reform trajectory that we have, the reform measures that we have.
“The private sector has been calling for discipline in fiscal management and I think if you look at what we have managed to achieve from January to now, we are now walking the talk in terms of the fiscal consolidation but that requires support from everyone.”
While austerity measures come along with its own challenges, indiscipline and unethical conduct of businesses have compounded the suffering of many Zimbabweans.
The country has been experiencing a wave of price increases and wild parallel market foreign exchange rates, which Government says are unjustified as macro-economic fundamentals that previously pushed inflation have been stabilised.
Government is looking at further cooling high inflation by targeting a gradual decrease in money supply growth to about 10 percent annual expansion in the short term.
Mr Kunaka expressed confidence that austerity measures would be a success, given the political will demonstrated by Government to support economic reforms.
“We have seen some instalments in terms of political will and political support which we should all ride on.
“Of course we still have a lot to do,” said Mr Kunaka.
He said the reforms were receiving strong backing from bilateral and multi-lateral partners
“I want to assure you that the response and support that we have so far received from bilateral and multi-lateral financiers has been quite astounding.
“If we take the instalments of things that we have implemented to-date, I think its convincing that we are on the right trajectory and stand a chance to win.”
