SESSION 2: THE POLITICAL ECONOMY OF THE BUDGET PROCESS


• 2. 1 Millennium Budget: The Response of Business and Industry
  Presented by Elton S. Mangoma, Partner, Kudenga and Co.
• 2.2 The Political Economy of the Budget Process
  Presented by Prof. Rob Davies, Economics Lecturer, UZ and also advisor to the budget committee in Parliament
• 2.3 Discussant’s Summary, Mr. Arnold Sibanda, IDS, UZ
• 2.4 Summary of the Budget Analysis and Issues Raised

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SESSION 2: THE POLITICAL ECONOMY OF THE BUDGET PROCESS

2. 1 Millennium Budget: The Response of Business and Industry
Presented by Elton S. Mangoma, Partner, Kudenga and Co.

The presentation reviewed the millennium budget from the point of view of business and industry. Mr. Mangoma described the budget as offering nothing but bad news to industry. It does not offer any incentives to boost and encourage business performance. Mr. Mangoma argued that the budget directed the economy towards de-industrialisation and poverty.

The presentation highlighted that the expenditure figures given in the budget were not accurate since there has already been some salary and wage increments in government, before the budget is even implemented. Mr. Mangoma also argued that the budget deficit for 2000 is grossly understated and the actual deficit will be at least twice what is reflected in the budget. He also argued that the tax collected in the next millennium will decrease as less people will be employed as more businesses will go under. PAYE collections will also decrease, making it impossible for the government to collect the $75 billion in revenue proposed in the budget. Mr. Mangoma recommended drastic adjustments to the budget for it to signify change for the better.

2.2 The Political Economy of the Budget Process
Presented by Prof. Rob Davies, Economics Lecturer, UZ and also advisor to the budget committee in Parliament

The presentation analysed and reviewed the budget from a political-economic approach and perspective. Prof. Davies’ presentation reiterated the sentiments of the other presenters that the Government had completely lost control of the budget process. His major observation was that the Minister of Finance’s acceptance of the pressure from civic society and Parliamentarians to debate and discuss the budget and make input into it is plausible. He however, criticised the timing of the presentation of the budget, arguing that the October budget presentation is problematic in that the real expenditure figures for October, November and December were not yet available at the time of presenting the 2000 budget proposals.

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The presentation also touched on the issue of supplementary estimates, which were also not included in the budget but were only tabled before Parliament the week before the seminar, making it confusing and difficult for the Parliamentarians to get focused and make a comprehensive and critical analysis of the complete budget. It was also noted that these supplementary estimates are fraught with a lot of anomalies, creating doubts about the accuracy of the figures and making the budget figures fictitious.

Prof. Davies also raised concern over the analysis of the salaries and allowances for the civil servants in the different Ministries which indicated that allocations for 1999 are higher than what is presented for the 2000 budget. However, there is no indication in the blue book of a reduction in the number of people employed in these Ministries, thus creating a discrepancy in the provisions of the 2000 budget and the reality on the ground. This shows a total loss of control of the budget process on the part of the Government. This also indicates a lack of intention or possibility of sticking with the proposed budget.

Possible explanations given for this scenario are the ever-increasing political problems. The Executive does not seem to regard the budget as seriously as they should. This is witnessed in the way the Executive does not consult with Parliament for approval and authorisation of expenditure, and the example given was that of the payment of gratuities to war veterans. Prof. Davies placed the blame on both the Executive and the Parliament. He argued that Parliament has not flexed its muscles enough to query the Executive. However, he acknowledged that MPs seem to be now becoming proactive, as seen by the pressure they have put, together with civic organisations, to make input into the 2000 budget. Prof. Davies also confirmed that from working with the MPs in the budgetary committee, they had shown that they are serious and eager to understand the issues and the process and to contribute to the process meaningfully.

Prof. Davies blamed both civic organisations and the public for complaining covertly and not challenging the system openly.

2.3 Discussant’s Summary
Mr. Arnold Sibanda, IDS, UZ

Mr. Sibanda applauded a political economic approach as being relevant to budgetary analysis and commended the organisers of the seminar for putting it on the agenda for the budgetary discussion. He indicated that a political economy approach has in the past, been limited to politicians and economists, but it needs to include the bureaucrats, because they are the ones who do the actual work on the budget document. He observed that in the new millennium budget case, the bureaucrats did not do their work properly and presented fictitious figures that do not have any bearing to the real situation. He however, also argued that the attitude by bureaucrats is not entirely due to incompetence, but could be due to frustration because of the realisation that even if they come up with a good budget, the Executive would not stick to it.

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Mr. Sibanda described the political situation highlighted by Prof. Davies as that of a governance crisis, where the Executive is cynical to government institutions and other structures. An example of this is the refusal to give MPs information on issues of concern to the nation. He argued that unless this issue is reviewed and the Executive makes an indication of a willingness and means to address this, then the political crisis will persist and however good the economic policies designed, they will not be implemented. Mr. Sibanda cited such economic documents as Vision 2020 and ZIMPREST, which he said were good in terms of economic and social vision, but were not taken seriously and were not implemented at the political level.

He described the political situation in the country as a serious crisis that was being manifested at the economic front. He argued that for any budgetary process or any other instrument of economic process, it was important to understand who would benefit from it and how. Mr. Sibanda declared that at the macro level, the 2000 budget was directionless and negative. He also argued that the fictitious figures in the budget gave credit to the IMF’s negative stance.

The 2000 budget, for instance, was described in Mr. Manyanya’s presentation as having nothing for the working people, in Mr. Mangoma’s presentation it was described as a disaster for the business people while Prof. Davies described the budget figures as fictitious and the budget as a whole as a frustration to the technocrats. There is no indication of who will benefit and who will lose in the Millennium budget, a scenario that is depressing and distressing.

2.4 Summary of the Budget Analysis and Issues Raised

• The seminar highlighted that Zimbabwe has generally not learnt to use the budget effectively. While a budget should be regarded as a short-term instrument for operationalising medium to long term development plans, in the Millennium budget, there seems to be no deliberate link between the budget and the long-term plans for the country. The budget was expected to deal with such issues as HIV/AIDS, public finance system, sustainable macroeconomic and sectoral policies and programmes, debt alleviation, inflation containment and adequate health and education, among many other current concerns of the Zimbabwean society. None of the issues are addressed in the presented 2000 budget. The proposed budget therefore does not show any link or acknowledgement of the bad state of the economy. The Ministry of Finance did not contextualise the budget and it seems to be framed outside the realities of the country’s economy. The budget tends to concentrate on paying salaries and collecting revenue and does not have a vision for the future and this is a serious flaw that needs to be addressed if the budget is to be of any significance in changing the economic situation of the country.

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• Since the Budget marks the final phase of ZIMPREST, the expectation was that the Ministry of Finance would use the objectives and goals of ZIMPREST as benchmarks for the budget; reviewing implementation of ZIMPREST to build on what has already started and take on board what is still outstanding. This would have helped the budget to be issue-focused. Effort should also have been made to frame the budget along the various sectoral policy documents under the Vision 2020 policy document, which outlined goals and targets on such issues as indeginisation, employment, population, housing, industrialisation, land reform, poverty eradication, gender and social policy among others. These issues should have been used as a basis for the allocation of votes in the budget. As such, the proposed figures in the budget do not have any basis or justification and are baseless. Some participants described them as fictitious and recommended the need for a review of the budget.

• Ownership of the budget process is also problematic. Given the rhetoric about national ownership of programmes and processes that concern the nation, for example, a national budget, people should be represented in the making and drafting of the budget. Parliamentarians, as representatives of the people have to be involved in the crafting process and not just in rubber-stamping the document. The document should also be made available to all stakeholders. The expectation was that the 2000 budget would be made available and open for input and contribution by all stakeholders before it is implemented. However, only a few copies of the budget were made available (5000 copies to be specific). This contravenes the right of the public and interest groups to have access to information on issues that affect them, and the question of ownership of the process.

• There seems to be no guiding principle and no evidence of leadership in the forefront to guide the process of economic recovery in the country.

• The Ministry of Finance’s inclusion of donor funds in the budget is a serious flaw and tragic in the sense that donor funding may not be forthcoming, which then implies that the Government will not be able to carry out some of its plans and programmes. The case of the IMF withholding funds was cited as a good example to learn from.

• On the issue of the introduction of an AIDS levy without consultation, the participants agreed that the levy would further burden the people and should therefore be scrapped.

• By way of summary, the Government’s priorities as indicated in the budget, seem divergent from the people’s expectations. The budget therefore needs to be reworked in order to address the various concerns raised.