30 November 2010
FINANCE Minister Tendai Biti has said his US$2,7 billion 2011 National Budget was conservative pointing out that revenue could top US$3,5 billion next year while the economy had potential to post double digit growth.
The Finance Minister said he had been very cautious with his 2011 projections as he provided for factors that might affect the current growth momentum, which could see gross domestic product expanding by 8,1 percent this year.
"I see massive growth of this economy in 2011. I had planned for US$8 billion GDP by 2015, but we will achieve it next year. I have, however, discounted the other growth potential in mining next year. Bindura Nickel Corporation will reopen and we will have another Zimplats as more platinum mines will open," said Minister Biti while addressing the Confederation of Zimbabwe Industries 2011 National Budget breakfast meeting in Harare last Friday.
Minister Biti added that he could have easily got away with a budget of US$3,5 billion but chose to be cautious considering resource constraints and the apprehension that affects economies in the event of elections, which are likely to be held next year.
"Everything being equal the economy could actually grow by a double digit rate next year, but I do not know what will happen next year. I also do not know what will happen in 2012," said Minister Biti.
Against this background Minister Biti has set official estimates of revenue collection at US$2,7 billion and economic growth at 9,3 percent. Annual inflation is estimated at 4,5 percent from less than 5 percent by end of the year.
He expects GDP to grow to an estimated US$6,08 billion by end of next year.
CZI president Mr Joseph Kanyekanye applauded Government for trying to balance the economic scale under difficult circumstances.
Minister Biti said the budget was premised on the multi-currency system, cash budgeting and consolidating the macro-economic reforms adopted at the beginning of the year and emphasised the budget would be broad based.
Apart from making provisions for civil service salary increments, at US$1 billion, Minister Biti made significant votes in the budget for education, health and social protection programmes for the poor and underprivileged citizens.
Despite limited fiscal space, said Minister Biti, he had set aside funds for critical infrastructure such as dams, roads, international airports, border post and completion of information communication technology infrastructure.
He also budgeted for water and sanitation systems to improve access to clean water and ablution facilities.
In addition, he said the Reserve Bank of Zimbabwe would be further capacitated to discharge the lender of last resort functions, which include setting the prime rate to give direction to lending rates in the local money market.
However, industry expressed some concern on the fact that the budget caused confusion on the issue of fiscalised memory devices, which must be implemented next January, a departure from the June deadline announced earlier.
Industry also demanded that the politics of the country be conducted in such a way that they do not create uncertainty and that they be consistency of policy and pronouncements of the same to enhance predictability and planning.
There were also concerns on the issue of demonitisation with industry demanding that the issue be finalised as bank account holders who lost money when the local currency was replaced expected some form of compensation.