The Sunday Mail
Senior Business Reporter
FINANCE and Economic Development Minister Professor Mthuli Ncube says Government will this year pay its workers the 13th cheque right on time, this month, because public finances are now in a healthier state than before thanks to austerity measures.
He said previously reckless Government spending through the Reserve Bank of Zimbabwe overdraft window and Treasury Bills wasted resources, creating the surplus electronic dollars within the market that increased demand for and caused the acute shortage of US dollars.
Zimbabwe does not print US dollars and must export to generate significant inflows of any hard currency, which the economy currently has constrained capacity to do although fundamentals remain good, apart from other sources.
The Treasury chief said this during a presentation to parliamentarians during a National Budget seminar with the lawmakers, at Elephant Hills in Victoria Falls, ahead of the presentation of the 2020 fiscal plan, which is scheduled for November 14.
Minister Ncube said under expenditure management, being done in terms of the Transitional Stabilisation Programme (TSP), a lot had been done to contain Government expenditure, enabling the Treasury to plan and time its financial obligations with a lot more ease than before.
“You remember there was a time when civil servants didn’t know when they would get paid, they didn’t know. Now, they know they will get paid on such-such a date, it is published and we will stick to that date.
“Also there was a time when civil servants didn’t know whether they will get a bonus or not, but now they will get a bonus every November as promised and that is what will happen at the end of this month.
“We have a biometric system, which is clearing up all the ghost workers. We are cleaning all of that up, and we are containing Government waste.
“On the revenue collection front, again our (revenue) collection systems are getting better every day; we are tightening up every day. Zimra is working hard to make sure our systems get better and all of this has resulted in better finances. That’s what austerity for prosperity has achieved; that is what it was designed to achieve,” he said.
Minister Ncube said between January and August this year, Treasury had consistently operated in surplus position, however, pointing out that after August the public finances entered some deficit position.
Nonetheless, the minister expressed strong conviction that with about two months still to go before year-end, the public finances were expected to end the year in a surplus and healthy state.
“We will still end the year on target within 4 percent of GDP in terms of our deficit target, so I can assure you Mr Speaker Sir and colleagues the (Government) finances are well managed and they are sound.
“I also confirm that we have stopped using the Reserve Bank of Zimbabwe window; you recall at the end of 2018 in the last Budget we had an exposure of about $3,5 billion that central Government, through Treasury, was borrowing from the central bank.
“That era is over. Since January 2019, we have not borrowed a cent from the central bank and it should be like that and that also gives the central bank a bit more independence,” Minister Ncube said.
While the fiscal deficit was now under control, Minister Ncube said the external position of the country, defined in terms of the state of the current account, was equally under control, which augurs well for efforts to stabilise the Zimbabwe dollar.
“The external deficit, which is your current account and so forth, is also under control. So what has happened is that the gap between exports and imports (trade deficit) has narrowed, if you compare 2018 and 2019 and the previous years.
“You need that when you are reforming. Why? Because if your deficit on the external front is huge it becomes an additional risk to your currency.
“It means you are living beyond your means in terms of demanding other people’s goods other than your goods and exporting to them and that is not healthy.”
He said because austerity measures had achieved their objective, it was now time to transition to productivity across all sectors and overall economic growth.
The Treasury chief pointed out that the containment of public expenditures and the declining current account deficit was what gave authorities the confidence to re-introduce the local currency.
“Those were key risks to introduction of a domestic mono-currency; that gave us confidence to do so,” he said. “Zimbabwe first introduced local currency, under the multi-currency regime, in February this year through Statutory Instrument 33 of 2019 and then totally removed the foreign currencies on the 24th of June through SI 142 of 2019.
“But, in doing that we also realised that we had a challenge in terms of store of value for ordinary citizens, including myself, so we needed to allow the citizens to retain the foreign currency accounts.
“Those foreign currency accounts should not be touched by the Government. We have to make that commitment; we have made that commitment,” he said.