The Sunday Mail
Illustrative graphs and tables are the staple of economists.
That is why trusted news sources for economic geeks almost always ensure that graphs are part of the menu.
It is, therefore, unsurprising that Finance Minister Professor Mthuli Ncube — who has a known obsession for numbers — whipped out a graph to show legislators at a Pre-Budget Seminar in Bulawayo last week how Government managed finances during the first few weeks of its life.
In essence, the graph shows that President Mnangagwa balanced the budget (matching expenditure to revenue), reversing an increasingly widening deficit.
“Excellent progress on Zimbabwe’s fiscal budget deficit reduction. In September 2018, the fiscal budget was balanced. Deficit was almost zero. Expecting this trend to continue to the end of the year,” tweeted the Finance Minister yesterday.
But why is this important to the ordinary Zimbabwean who is agonising over steep prices in supermarkets? How does this affect the mood of the festive season that is upon us?
How is this helpful to parents who are struggling to raise school fees for next year? What does it mean for Zimbabweans over the next five years, and thereafter through to 2030 by which time we should become an upper middle-income economy?
Well, the finance chief believes the current trend “will contribute to stabilising the currency and in containing inflation”.
We know all too well how currency volatility — which was apparent during the tumultuous period in the market last month — can be devastatingly disruptive to livelihoods.
We also know all too well how rising inflation eats into disposable incomes and materially affects the standard of living.
If Treasury’s graph is to be taken as an artist’s canvass, the rosy picture that is painted on it is quite encouraging.
And it should get better.
Exports continue to rise, while targeted gold output — which is one of the biggest revenue contributors to the fiscus — has since been revised upwards to 34 tonnes, four tonnes more than the initial forecast.
And then there are additional revenues from the intermediated transfer tax. It must also be appreciated that the tax man has been exceeding revenue generating targets since the beginning of the year.
A balanced budget, itself an indication of fiscal discipline, not only illustrates a prudential return to sound management of public finances, but it a key building block to macroeconomic stability.
Essentially, the economy, as President Mnangagwa promised on the campaign trail, is undergoing structural transformation, where evidence-based decision-making processes are complimented by transparent and robust economic governance.
Macroeconomic stability has to be sweet news for companies that are now able to plan for the future, betting on a predictable economy.
It also secures domestic investments and feeds into currency stability.
Not only that, it is a boon for investors — market watchers, fund managers and portfolio investors — particularly those that are looking to emerging markets.
It equally makes a statement to the various creditors that Zimbabwe is willing to not only walk the talk, but to walk the hard miles to economic recovery.
Further, the balanced budget confirms what many have always known about President Emmerson Mnangagwa: he is a man of his word, and you can take his word to the bank.
This is the quintessential element of confidence.
We should expect investors — serious investors — to continue making their economic pilgrimage to Harare, as they have been doing since the beginning of the year.
This makes the 2019 National Budget that will be announced in 12 days an interesting economic proposition, coming as it does after the launch of Transitional Stabilisation Programme last month.
The fiscal policy statement, we have been told, will contain the nuts and bolts of how the new team expects to grow the economy.
But it won’t be an easy walk.
At the heart of the country’s problems is low productivity on farms, and low output from mines. And in both sectors, there is little to no beneficiation meaning our economy is starved of value chains and by extension value.
Being able to put the hard-won land under production, which will naturally cut the country’s import bill and improve the country’s fiscal budget, will give tailwinds to local economic growth.
It is hardly surprising that local companies, the majority of which are unable to get critical raw materials from the local market, have to scour for foreign currency to import key ingredients for industry.
The country continues to bleed precious foreign currency through importing commodities that can ordinarily be produced locally.
The onus is on both Government and the private sector to develop value chains and deepen forward, backward and side linkages.
This is why the 2019 National Budget should provide a platform for development. And there is every reason to be optimistic.
