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Saturday, January 16, 2021

Budget too ambitious – Business

Business and labour have described as ambitious the $421 billion 2021 national budget presented last Thursday by Finance and Economic Development Minister Mthuli Ncube.

They said while Minister Ncube had tried to juggle and balance a lot of competing interests, there were fundamental issues that were left unattended.

Some of the issues that they felt ought to be revisited include sustainability of the exchange rate, erosion of wages and the need to come up with realistic growth rates and inflation rate projections.

In an interview, Employers Confederation of Zimbabwe Dr Israel Murefu said the projected figure of economic growth was realistic as it was not consistent with fundamental challenges that the economy was plagued with.

 “The budget, in my view, is both ambitious and progressive. There is need to do more around sustainability of the exchange rate stability, creating confidence in local currency and lowering inflation rate which obviously is still high and unsustainable. Otherwise the Minister tried his best to juggle around national priorities and objectives in a situation where external budgetary support is almost not there. There is therefore need for all of us to support efforts to achieve what is in the plan we could get to somewhere in 2021,” said Dr Murefu

“The 7,4 percent projected growth figure of the economy, while good and encouraging, may be difficult to achieve because we have covid19 related disruptions and other legacy issues such that include drought and other national disaster such as Cyclone Idai that had a toll on our resources. We are still grappling with some of these national disasters and this may militate against the desired growth target,” he said.

Dr Murefu said as business they were encouraged by the focus on upgrading and modernisation of infrastructure as that augured well for business in reducing operational and access to markets costs.

“Water is also critical for business in the same manner as power and fuel. The widening of tax bands augurs well for both employees and business because it increases spending power in the hands of workers and businesses benefit from increased consumption of their products and services which grows with increased spending,” he said.

Harare Residents Trust said while it was commendable that Government had earmarked money for devolution there was need for local authorities to play an active role in deciding how to spend it.

Renowned economist, Gift Mugano said Government was a Catch 22 situation in that by trying to raise salaries for civil servant it was raising inflation.

Zimbabwe Congress of Trade Unions president, Peter Mutasa said there was little to cheer for the budget given that wages were, just as there was low productivity in the country.

“This was not addressed and we will witness more job cuts as companies rile under low demand due to low wages. The issue of low salaries is not just a labour issue but an imperative for economic recovery. Without addressing this, the budget statement means nothing to workers. In-fact with a host of other taxes in foreign currency, it spells more misery to the working class,” said Mutasa.

He slammed the decision by Government to restrict the importation of second-hand vehicles saying it had adverse effect on low income earners who yearn to own cars.

“The ban on second hand cars is another elitist approach by the government, an anti-poor people policy. They are not concerned about the rich bringing in vehicles worthy over half a million American dollars. They are after the poor who are trying against all odds to have some minimum comfort. They are after the poor who are now relying on second hand clothing,” said Mutasa.

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