Golden Sibanda
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.
Wednesday, December 1, 2010
Thursday, November 18, 2010
From John Robertson
Zimbabwe’s October's inflation figures show a month-on-month increase of 0,22%, which carried the index number up to 95,27. As this figure was 91,96 in October last year, the year-on-year inflation rate works out at 3,6%.
Prospects for change in the coming year seem likely to be driven mostly by wage demands and by movements of the rand against the US dollar. On the local increases in labour costs, the faster rate of increase in affected consumer goods prices might not impact on the prices people pay if they can choose a more competitively priced imported product. Local producers seeking to recover higher labour costs are therefore more likely to price themselves out of the market than to add to inflation. However, the loss of jobs for those companies that fail will cause a shrinkage in local buying power as well as in the taxes paid to government and the local authorities.
The rand exchange rate appears to be settling into a pattern of minor adjustments between R6,8 and R7,10 to the US dollar. The news a week ago that the US is to print another $600 billion to ease the liquidity has cast the US dollar’s recovery prospects into a deeper shadow, so perhaps a weakening rand is still some way off. Meanwhile, Zimbabweans will be spending mainly weaker US dollars to pay for goods priced in strengthening rand, so our import procurement costs are more likely to go up — unless we can source the goods from local suppliers. Zimbabwean factories should be trying to recapture the loyalty of local retailers now, while the rand is strong, and industrial workers will be more likely to keep their jobs if they can restrain their wage demands and improve on their levels of productivity.
Prospects for change in the coming year seem likely to be driven mostly by wage demands and by movements of the rand against the US dollar. On the local increases in labour costs, the faster rate of increase in affected consumer goods prices might not impact on the prices people pay if they can choose a more competitively priced imported product. Local producers seeking to recover higher labour costs are therefore more likely to price themselves out of the market than to add to inflation. However, the loss of jobs for those companies that fail will cause a shrinkage in local buying power as well as in the taxes paid to government and the local authorities.
The rand exchange rate appears to be settling into a pattern of minor adjustments between R6,8 and R7,10 to the US dollar. The news a week ago that the US is to print another $600 billion to ease the liquidity has cast the US dollar’s recovery prospects into a deeper shadow, so perhaps a weakening rand is still some way off. Meanwhile, Zimbabweans will be spending mainly weaker US dollars to pay for goods priced in strengthening rand, so our import procurement costs are more likely to go up — unless we can source the goods from local suppliers. Zimbabwean factories should be trying to recapture the loyalty of local retailers now, while the rand is strong, and industrial workers will be more likely to keep their jobs if they can restrain their wage demands and improve on their levels of productivity.
Wednesday, November 3, 2010
Mineral output - from John Robertson
Zimbabwe's mineral production volume and value figures through to August have now been released. The attached table shows the figures recorded by the Chamber of Mines and these illustrate the extent of the improvements seen in gold and coal output. However, progress has been hesitant for many of the minerals and figures for some of them, such as limestone and black granite, have not been recorded as efficiently as they were in the past, even though the minerals are still being produced.
Monday, November 1, 2010
From John Robertson
The Central Statistical Office has updated its Poverty Datum Line table to August 2010. This shows the dollar amount needed by an individual and by an average family of five people to meet the cost of basic essential food items for a month and the amount needed by them to meet the total consumption needs, also for a month.
The CSO defines the PDL as the cost of a given standard of living that must be attained if a person or family is to be deemed not to be poor. Accordingly, in August 2010, if an individual were receiving an income below US$146 a month, or if a family of five were receiving a sum below US$477, and if they were entitled to no benefits, allowances or subsidies, they would be deemed to be poor.
The CSO defines the PDL as the cost of a given standard of living that must be attained if a person or family is to be deemed not to be poor. Accordingly, in August 2010, if an individual were receiving an income below US$146 a month, or if a family of five were receiving a sum below US$477, and if they were entitled to no benefits, allowances or subsidies, they would be deemed to be poor.
Wednesday, October 20, 2010
From John Robertson
The detailed Consumer Price Index table shows that during September the price changes recorded were mostly fractions of one percent and the prices dropped down slightly during the month for about two dozen of the consumer goods identified.
A similar number of goods are also shown to have decreased against their levels a year ago, but some of these decreases are quite significant, led by carpets and floor coverings, which fell by 38,7%. New and used car prices went down by 29,7% and small electrical household appliances became 22% cheaper. However, hotel accommodation increased by 45,9%, motor cycle prices increased by almost 30% and vehicle maintenance charges rose by 21,3%.
Figures for school fees remain absent from the table, but the reason for this has not been explained.. Very few new statistics are being released by the Central Statistical Office at present, but I am hoping to receive indications of manufacturing output changes within the next few weeks. Some mining production volume and value figures will also be ready soon.
Kindest regards,
John
A similar number of goods are also shown to have decreased against their levels a year ago, but some of these decreases are quite significant, led by carpets and floor coverings, which fell by 38,7%. New and used car prices went down by 29,7% and small electrical household appliances became 22% cheaper. However, hotel accommodation increased by 45,9%, motor cycle prices increased by almost 30% and vehicle maintenance charges rose by 21,3%.
Figures for school fees remain absent from the table, but the reason for this has not been explained.. Very few new statistics are being released by the Central Statistical Office at present, but I am hoping to receive indications of manufacturing output changes within the next few weeks. Some mining production volume and value figures will also be ready soon.
Kindest regards,
John
Tuesday, October 12, 2010
Banker Association President Defends Bank Charges
12 October 2010
Harare — THE Bankers Association of Zimbabwe has defended local bank charges saying they are comparable to the region, although they differ slightly due to high cost of utilities.
In an interview with Herald Business BAZ President Mr John Mushayavanhu said according to a recent study, also sent to the Ministry of Finance, rates levied by the local banks were not out of line with regional trends.
"We have done a study and I can confirm that our rates are very much comparable to the region. There are slight differences because our infrastructure and utilities such as power as we sometimes use generators," he said.
The BAZ president said local bank charges were not exceptional considering other countries such as South Africa even charge their clients for depositing money, which does not happen in the local banking sector.
There has been concern from the banking public, the Ministry of Finance and Reserve Bank that banks were ripping off clients with high charges yet they did not give any interest on account facilities such as current accounts.
In many instances depositors are baffled when they discover that after making bank deposits their balances would be significantly reduced by service and monthly charges, which have discouraged the use of the banking system.
Economists said current account balances are reduced each time the holder withdraws money or asks for a statement with banks charging up to US$3 per transaction. Current accounts may attract 3 percent interest in a year.
Mr Mushayavanhu said bank clients had options to operate either holding or investment accounts. Current accounts, despite the apparently high service charges, do not attract interest on deposits, as they are believed to be meant to facilitate the transfer of money from one point to the other and usually do not hold funds for a long time.
On the other hand, savings accounts, which hold deposits over a fixed period of time, hold funds for a given time allowing banks to also draw on the money for investment elsewhere meaning banks earn a return on them.
Savings accounts, which essentially are demand accounts where the holder may call on the money after a month, are able to attract interest of between six and eight percent.
Clients can also make returns from investment facilities such as fixed term deposits. On average a 60-day deposit, depending on amount, attracts between 11 percent and 15 percent.
Ninety-day deposits presently attract between 12 percent and 16 percent, but the actual rate may be determined by amount invested.
As part of efforts to encourage use of the banking system, said BAZ, banks were now advertising business conditions. He noted confidence was slowly returning to the sector after a decade of instability eroded public trust.
Mr Mushayavanhu said the imminent resumption of lender of last resort function by the Reserve Bank and the existence of the Depositor Protection Board should help improve public confidence in the operations of local banks.
"We have the Depositor Protection Board, which is more like an insurer of banks, which would compensate depositors in the event that a bank goes under," said Mr Mushayavanhu.
Confidence in the local banking sector was shaken after a decade of economic instability when thousands of people lost their money after the country dumped the local currency and adopted the multi-currency system.
Harare — THE Bankers Association of Zimbabwe has defended local bank charges saying they are comparable to the region, although they differ slightly due to high cost of utilities.
In an interview with Herald Business BAZ President Mr John Mushayavanhu said according to a recent study, also sent to the Ministry of Finance, rates levied by the local banks were not out of line with regional trends.
"We have done a study and I can confirm that our rates are very much comparable to the region. There are slight differences because our infrastructure and utilities such as power as we sometimes use generators," he said.
The BAZ president said local bank charges were not exceptional considering other countries such as South Africa even charge their clients for depositing money, which does not happen in the local banking sector.
There has been concern from the banking public, the Ministry of Finance and Reserve Bank that banks were ripping off clients with high charges yet they did not give any interest on account facilities such as current accounts.
In many instances depositors are baffled when they discover that after making bank deposits their balances would be significantly reduced by service and monthly charges, which have discouraged the use of the banking system.
Economists said current account balances are reduced each time the holder withdraws money or asks for a statement with banks charging up to US$3 per transaction. Current accounts may attract 3 percent interest in a year.
Mr Mushayavanhu said bank clients had options to operate either holding or investment accounts. Current accounts, despite the apparently high service charges, do not attract interest on deposits, as they are believed to be meant to facilitate the transfer of money from one point to the other and usually do not hold funds for a long time.
On the other hand, savings accounts, which hold deposits over a fixed period of time, hold funds for a given time allowing banks to also draw on the money for investment elsewhere meaning banks earn a return on them.
Savings accounts, which essentially are demand accounts where the holder may call on the money after a month, are able to attract interest of between six and eight percent.
Clients can also make returns from investment facilities such as fixed term deposits. On average a 60-day deposit, depending on amount, attracts between 11 percent and 15 percent.
Ninety-day deposits presently attract between 12 percent and 16 percent, but the actual rate may be determined by amount invested.
As part of efforts to encourage use of the banking system, said BAZ, banks were now advertising business conditions. He noted confidence was slowly returning to the sector after a decade of instability eroded public trust.
Mr Mushayavanhu said the imminent resumption of lender of last resort function by the Reserve Bank and the existence of the Depositor Protection Board should help improve public confidence in the operations of local banks.
"We have the Depositor Protection Board, which is more like an insurer of banks, which would compensate depositors in the event that a bank goes under," said Mr Mushayavanhu.
Confidence in the local banking sector was shaken after a decade of economic instability when thousands of people lost their money after the country dumped the local currency and adopted the multi-currency system.
China and Zimbabwe
The rise of China in Zimbabwe:
"Closer economic and diplomatic ties between China and Zimbabwe have had wide and far-reaching effects. Not only has Beijing been vetoing plans by the West and European capitals to take sterner action against Harare at the United Nations Security Council for her alleged human rights violations, but its capital has also come in handy for Zimbabwe.
State-owned Chinese firms, supported by their powerful State apparatus and employing low-cost but efficient labour are not only outbidding contractors from other parts of the world for African projects, but are now controlling a formidable slice of telecommunications, textiles, construction and mining deals in Zimbabwe..."
"Closer economic and diplomatic ties between China and Zimbabwe have had wide and far-reaching effects. Not only has Beijing been vetoing plans by the West and European capitals to take sterner action against Harare at the United Nations Security Council for her alleged human rights violations, but its capital has also come in handy for Zimbabwe.
State-owned Chinese firms, supported by their powerful State apparatus and employing low-cost but efficient labour are not only outbidding contractors from other parts of the world for African projects, but are now controlling a formidable slice of telecommunications, textiles, construction and mining deals in Zimbabwe..."
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