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SESSION 3: STRATEGIES FOR THE NEW MILLENNIUM AND THE WAY FORWARD
3.1 Strategic Policy Issues for the Next Millennium
Presented by Mr. Masimba J. Manyanya, ZCTU Economist
The focus of this presentation moved from the budget per se to strategic policy issues of where the country is coming from and going economically. Mr. Manyanya proposed a policy-priority paradigm, with a focus on more than just the technical level.
Mr. Manyanya reviewed the economic approaches used in Zimbabwe since independence, from Growth with Equity, to Socialism and then Liberalisation. He noted that just after independence the Government was very visible in the economy. During the ESAP and liberalisation phase, IMF became more visible in the economy than the Government and today it is no longer clear who is in charge of the economy and the Government is not at all visible in the process. There is an invisible hand at play and its more of neo-colonial politics that are at play and the people seem to have been eliminated in the process. Mr. Manyanya recommended that the preamble of the budget acknowledge the supremacy and centrality of the people and their concerns in the making of a budget. He argued that an understanding of this economic background is necessary for the budget to be able to map out effective strategies for the recovery of the economy.
His presentation highlighted three major challenges facing the new millennium, based on real issues facing the country today, and these are:
- Economic decline; where it is estimated that by the year 2000 the country will experience a 0% economic growth rate.
- AIDS; given that 1,700 people are estimated to be dying of AIDS every week, there is need for path breaking interventions, and the AIDS levy is not one such solution and therefore needs to be reviewed.
- Poverty; since this is central and permeates all spheres of peoples existence, there is need to focus on programmes and strategies that aim to reduce and eliminate it.
Mr. Manyanya added that there are three areas and issues that can be possible pivotal points for building hope for the next millennium. These are:
- Economic Growth;
- Health; and
He indicated that there have been targets set for the year 2000 in all these three areas, and as such, the three could form a framework for the development of a budget.
In addition to these, he also identified four critical areas that need to be addressed and these are:
- Macro-economic stability; and at the centre of the macro-economic issue is the debt problem, where the government is recycling domestic debt and the debt is
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accumulating. There is need to seriously address how the debt burden can be fixed. The government says that it will deal with debt through asset sales, privatisation of parastatals and streamlining the civil service, but there is need to realistically analyse how much can be raised out of that. For instance, most parastatals are actually loss-making institutions and so would not sell for much.
- Empowerment; how to ensure participation in a market driven economy;
- Banking and Finance Sector; promoting a healthy banking and finance sector to ensure a healthy economic sector; and
- Social Protection; especially in the education and health sectors.
Mr. Manyanya argued that these four pillars provide hope for recovery and the development of a viable economy once they are addressed. For instance, there is need to review the revenue collecting methods, and not by taxing the people more, but by improving the efficiency in collecting the existing taxes.
He also pointed out that there is need to acknowledge that the country has a very huge debt, which has to be addressed and one of the options of getting out of it is through international donor aid and a tight disciplinary and restructuring programme. The reality is that it will be better to sell the debt externally to the World Bank, which has lower interest rates of 1% than to recycle the domestic debt at 60% interest.
3.2 Discussants Summary
Dr. Rogers Dhliwayo, Economics Lecturer, UZ
Dr. Dhliwayo reiterated that the budget is disappointing. He argued that while the budget acknowledges the problem of Zimbabwes economy, i.e. the high budget deficit, there is no indication for a desire to solve it. He highlighted that Zimbabwe has the highest expenditure as a ratio of GDP in the world and this has to be addressed. He indicated that there was need to:
- put emphasis on the streamlining of the civil service;
- reform the way the budget is made, to include Parliamentarians and the latter should be able to use their powers to amend the Treasury Bill and even to reject a proposed budget. This could lead into Parliament being dissolved, as happened in Australia in 1975, when both Houses rejected the budget and were revoked;
- ensure that every budget must be macro-economic and growth-oriented, addressing issues of the economy and development;
- have full-time committees working and scrutinising each sector allocation in the budget and making informed recommendations;
- have up to date figures to be able to assess their impact on the public;
- have a strong financial sector to make the economic sector healthy;
- have a co-ordination of fiscal and monetary policy to stimulate growth in the economy;
- have the public and civic organisations to change their attitude and be open in challenging the system.
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3.3 Budget Proposals and The Way Forward
Presented by Dr. Rogers Dhliwayo, Economics Lecturer, UZ
Dr. Dhliwayos presentation reiterated that the 2000 budget is undoubtedly a disappointment and that the debt crisis is the major challenge for Zimbabwe. Given a scenario where the allocation for interest payment is three times more than that for health, it is a serious and tragic situation. This implies that the budget process has been completely lost. He put forward a number of ideas as a way forward for the new millennium including:
- Need for the Government to come up with ways of resolving the debt problem with one suggested way of doing this being converting the government loan to a foreign loan on concessionary terms;
- The exchange rate has to be addressed; a mechanism needs to be put in place, through concession and privatisation. There seems to be no commitment on the part of government to speed up privatisation;
- Address domestic debt and lock-in inflation and this will in turn stabilise interest rates;
- Reduce non-interest recurrent expenditures, which are at about 24% of GDP and achieve and maintain a surplus of 3% of GDP, and the defence expenditure should be drastically reduced in line with available resources;
- To address the budget deficit problem, the Government should not cut capital expenditure. In fact, it should increase it so as to stimulate growth. However, since the time of ESAP, capital expenditure has been cut to 2% and this has translated into static growth in the economy;
- Streamlining of the civil service;
- The whole idea of supplementary budgets has to be scrapped as they are confusing and these can be replaced by a cash budget. However, a cash budget requires a supportive political leadership and Executive for it to work and this is lacking in Zimbabwe;
- The whole Parliamentary process has to be strengthened both in terms of research and services through the creation of an independent Parliamentary research service and a joint permanent Public Accounts Committee to deal with issues such as the national budget. Parliament needs to be empowered to meaningfully participate in the crafting of the budget and be able to scrutinise and assess it since the budget is the most important economic policy tool of any government and people;
- Government deposits should be removed from the Reserve Bank and put into a Commercial Bank as a constraining factor for the politicians when they want to borrow;
- An independent central person should be responsible for monitoring and ensuring that the budget is properly implemented and the person should be fired if s/he does not carry out the duties effectively;
- Need for a political leadership with a political will and commitment to craft and implement the budget;
- Advise Government to keep good relations with the IMF and the WB but discourage them from unnecessary borrowing from the organisations since economic growth does not augur well with heavy borrowing;
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3.4 Open Discussions
A number of concerns and suggestions were raised from the floor and these included that:
- A budget is supposed to be regarded as part of the implementation of policy and should therefore reflect this by being issue based;
- Concern was raised as to what turn-around the economy was likely to come out of holding elections and changing government. In response to this, it was noted that fair elections could create a good environment for improvement and that a sound political environment was a prerequisite for a vibrant economy. There is need for political commitment for the economic policies and programmes to be successful and an example was given of the case of the Vision 2020 programme in Malaysia which was a political statement by Mahatir and so had a lot of political commitment backing to its implementation. The problem is not a technocratic but political one and has to be dealt with at a political level. Emphasis was put on the need for political direction for a sound economy and performance.
- It was pointed out that there was need to focus on issues and not personalities in discussions for the progress of the country.
- It was noted that the health of the financial institutions should be translated from the health of the economy at large and therefore there is no way the financial sector in Zimbabwe can be healthy when the health of the economy is poor.
- One participant argued that Zimbabwe should have concentrated on creating the wealth and not distributing it.
- Concern was raised that while the debate on the 2000 budget is on-going, some of its proposals are already being effected since they were said to be with immediate effect" and the problem was how MPs were expected to discuss issues that were already being enacted. The response to this was that the budget was still subject to discussion, although the Minister had the right to announce some immediate taxes and that this was not peculiar to Zimbabwe.
- One participant raised concern that the issue of the budget as a social contract had not been reflected in the budget nor in the presentations at the seminar. It was agreed that the issue was pertinent and that one cannot dialogue on the budget alone. There was indeed need for dialogue on fundamental priorities and how and when they will be addressed and implemented.
- While donor-funding was acknowledged as important, there was an expression of fear and worry over its implications to the countrys autonomy and freedom from interference by the donor countries. The issue was therefore on how to maintain a balance between the two.
- One participant raised concern on the way forward, given the scenario where Zimbabwe is in the process of drafting a constitution and the budget is supposed to be a constitutional issue. The issue was that do we start with addressing the constitution or the budget?
- There is need for a total redefinition of government;
- There was also concern about lobby groups such as ZCTU, ZNCC etc that are generally viewed by the government as opposition and enemies, to be at the fore-front
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of challenging the budget, as they are likely to be ignored. It would be best for these lobby groups to advise the MPs, who happen to have the opportunity to discuss the budget, and to negotiate and discuss the budget with Government.
- As a long-term strategy, there is need to undertake a programme of economic reformation under a new government.
- Most of the sentiments from the floor reiterated that the government had lost control of the budget process and the 2000 budget was felt to be a crisis budget which needs to be changed.
3.5 The Way Forward
As a way forward, participants agreed that there is need for civic organisations to make an intervention to influence some changes in the 2000 budget.
The major issue debated was whether to lobby MPs to block, delay and ask for amendments, or reject the 2000 budget wholesale. The idea of total rejection of the document was ruled out since it was likely that Parliament would be dissolved and the President would call for elections and make sure he wins them, thus legitimising his position for the next five years.
The option that seemed to be favourable among participants is the proposal to mobilise MPs to delay acceptance of the budget until sensible figures are produced. The strategy will be to lobby NGOs, civic organisations and the media to expose the flaws in the budget and make the nation informed, as a way of delaying its implementation and approval. A statement in the newspaper would also create more publicity of the problem.
However, it was noted that civic organisations should not entirely depend on MPs to challenge the budget since most MPs are party cadres and are likely not to challenge a system they are a part of. There is need for economists, consultants and professionals to be serious and take the issue forward themselves. A suggestion was also made to block the proposed salary increments for MPs, since these are tantamount to corruption.
ZES was challenged to prepare an economic model in which the country is self-reliant and another one where IMF and World Bank demands are incorporated and these to be used as a reference for designing an appropriate economic model for the country.
The organisers of the seminar were asked to follow up the issues raised and give feedback to participants.
It was resolved that all MPs would get a copy of the report so that they can get an indication of some of the major issues to be addressed when discussing the budget.
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3.6 Closing Remarks
The Chair, Mr.Lovemore Kadenge, reiterated that it would be difficult to make MPs reject the budget and underscored the need to influence change. He reiterated the need for participants to be realistic, given the context and situation in which they are operating for them to be able to influence change. He expressed regret that there had been no representatives from the Ministry of Finance and from the MPs, for them to appreciate the concerns and issues raised. However, he assured participants that the report would be circulated to them. He closed the seminar by thanking everyone for attending. He encouraged people to join ZES and participate in the discussion of issues that are in the national interest.
© Friedrich Ebert Stiftung
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fes-library | August 2001