Duty on food stuffs restored

Subject: Duty on food stuffs restored - http://www.herald.co.zw/index.php?option=com_content&view=article&id=16551:duty-on-food-stuffs-restored&catid=37:top-stories&Itemid=130

Business Reporters

FINANCE Minister Tendai Biti yesterday restored import duty on some food stuffs to protect local industry, as he expressed optimism on the economy achieving the targeted 9,3 percent growth figure by year-end.

Presenting the Mid Year Fiscal Policy Review Statement, Minister Biti said the re-imposition of duty has been necessitated by improved supply of basic goods and also the need to protect local producers.

He did not announce a supplementary budget preferring to go by the status quo.

For basic commodities such as maize meal and cooking oil, the proposed import duty will take effect from next month while for other food stuffs such as potato chips, baked beans and mixed fruit jam, the rates will start applying from the beginning of September.

The proposed duty will range between 10 percent and 25 percent.

Duty on salt, rice and flour will remain suspended until end of this year.

"Government will continue to monitor the supply of cooking oil and maize meal in order to ensure the availability at competitive prices," said Minister Biti.

He expressed optimism that the country would achieve the projected 9,3 percent economic growth rate this year. The growth would be largely supported by agriculture and mining sectors which are expected to expand by 19,3 and 44 percent respectively.

Inflation is expected to end the year at 4,5 percent on the back of improved production and fiscal discipline.

"I am pleased to report that economic growth remains on course, driven by robust performance in agriculture and mining, with moderate contributions from tourism and manufacturing," said Minister Biti.

He announced a US$40 million fund for distressed and marginalised areas in partnership with a local pension house. Government will avail US$20 million with the remainder coming from the partner.

Government is also putting together a US$40 million insurance and pension sectors housing fund from resources mobilised from the pension and insurance industry.

On the budget performance, Minister Biti projected a deficit of about US$700 million due to increased wage bill and huge cost of importing grain.

He said budgetary pressures compounded by unbudgeted employment costs were likely to reach US$404 million by year end.

Government had provided the wage bill of US$1,3 million under the US$2,7 billion 2011 budget.

"While the 2011 National Budget provided expenditure of US$2,7 billion, indications remain that, as pointed out above, the revenue performance to date shows a half year shortfall of US$65 million," he said.

"This is at a time when we face additional expenditure pressures totalling about US$550 million related to critical priority programmes in a number of areas.

"I have to appeal to my colleagues in the Cabinet committee on resource mobilisation to assist in raising this money."

Zimbabwe is set to import about 300 000 tonnes of maize to meet an impending shortfall.

Minister Biti said proceeds from diamond revenue have been earmarked to meet the additional employment costs for State workers.

He said there was a need for transparency over diamond revenue "as non-performance" of this sector poses serious budgetary and wage payment challenges.

Minister Biti expressed concern at the low uptake of funds by the private sector in the face of the existing liquidity crunch in the country.

He said during the first six months of the year, disbursements from approved facilities of about US$1,6 billion amounted to US$613,9 million.

About US$13 million was disbursed under the US$70 million Zimbabwe Economic Trade Revival Facility.

"The low uptake of lines of credit can be attributed to capacity issues, protracted approval process by the lenders and the delays in fulfilling conditions by the local banks," said Minister Biti.

In the six months to June this year, the country registered a trade deficit of US$1,4 billion with imports coming at US$3,4 billion against exports of US$2 billion.

On foreign direct investment, Minister Biti said the ability of the country to attract investment was being undermined by the perceived high profile country risk.

Government was finalising importation of coins from the US.

The coins are likely to be unveiled before end of this year.

Highlights

• Duty on foodstuffs re-introduced

• 9,3 percent economic growth projection maintained

• US$40 million Distressed and Marginalised Areas Fund for industry

• US$20 million for SME support

• ZETREF to be democratised

• US$700 million budget deficit forecast

• Duty on raw material to be reduced by September 1

• Rebate of duty on prepaid meters granted

• No supplementary budget

• US$40 million housing fund from insurance and pension industry

• Rebate on duty for motor vehicles and capital goods for tourism sector reinstated