4.4 THE POLITICAL ECONOMY OF THE BUDGET PROCESS IN ZIMBABWE
Presented by Prof. Rob Davies, Department of Economics, UZ

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4.4 THE POLITICAL ECONOMY OF THE BUDGET PROCESS IN ZIMBABWE
Presented by Prof. Rob Davies, Department of Economics, UZ

The Year 2000 Budget was presented to Parliament on 23 October 1999, more than two months before the end of the 1999 fiscal year. The reason for this presentation was the Minister’s response to requests by Parliament and other interested groups that the Budget should be presented in time to allow proper discussion and inputs by Parliament and civic society. This positive response is to be welcomed. However, the early presentation of the Budget creates the problem that the figures for actual expenditures in 1999 were not available at the time of presenting the 2000 proposals. It was therefore necessary to assess the proposed allocations for 2000 against the proposed allocations for 1999 – what the Minister had suggested in his statement last year.

The Supplementary Estimates of Expenditure for 1999 have now been made available. Although these do not show actual expenditures – such figures will not be properly available for some years, until the Auditor and Controller General’s Report for 1999 is made – they do give us a better indication than was there until now.

One has doubts about the accuracy of the estimates. For example, Rural Resources and Water Development do not have any supplementary estimate. Were there no salary increases in that Ministry? Similarly, in many Ministries there are increases for allowances, but not salaries or vice versa. This seems strange. So the authenticity of the figures could be questioned, although there may well be acceptable explanations for these anomalies.

Be that as it may, there are a number of insights that can be gotten from considering them. There is the usual problem that the supplementary estimates are being presented to Parliament after the excess expenditures have been incurred. This is a familiar and long running problem: there appears to be no way in which Parliament or Government can prevent Ministries from making unauthorized expenditures. People are familiar with this evidence of Government loss of control over the Budget. However, this presentation will concentrate on two other less familiar pieces of evidence that emerge from the Supplementary Estimates.

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First of all, what is the estimated budget deficit for 1999? In his budget statement the Minister said that he estimated a deficit of $16.2billion or 7.5% of GDP. This was based on total expenditure and net lending of $74.1billion. The supplementary estimates show vote appropriations to be $52.8billion. If one adds to this the authorized statutory appropriations of $21.9billion plus the additional interest of $11.6billion acknowledged by the Minister, total spending would come to $86.3billion and the deficit would be $28.4billion or 13.1% of his forecast GDP. This assumes that allocations to pensions and other statutory expenditures have not exceeded budget allocations. It thus seems that the deficit for 1999 is considerably larger than the Minister believed only a month ago. Assuming that the Minister’s estimate was given in good faith, it suggests that the Ministry has only become aware in the last month that the problem is much worse than they believed. This would be one sign of the budget being out of control.

The second sign of focus relates to the implications of the Supplementary Estimates for the proposals for the 2000 budget. Most of the Supplementary Vote Appropriations are related to Salaries, Wages and Allowances. In Table 4.3, a comparison of the revised salary bill in each Ministry with the allocation for 2000 is made. The broad message is that the nominal salaries Bill for 1999 is higher than the amount allocated for 2000. Any serious commentator would have to raise questions about the viability of the 2000 budget. It cannot be that the Ministry expects cuts in nominal salaries of civil servants. If there are any increases that approach the expected 35% rate of inflation, then numbers would have to be cut by 35% at the average salary level. There is no mention of such plans. Furthermore, there have been announcements concerning salary increases in the civil service since the Budget statement. Finally, next year is an election year. No rational government would implement the drastic policies required to implement the 2000 budget.

It can thus be concluded that the figures in the 2000 Budget are fictitious, in that the drafters know that they have no bearing on reality. In the past, some have believed that the Budget was a work of fiction because of Government’s unwillingness to be bound by expenditures authorized through the budget process. This year it is different: even if Government wanted to stick to the Budget it would find it impossible to do so. This is obvious even before the event.

This presentation was supposed to focus on the political economy of the budget process. Instead it presents these rather bleak figures since they are not known. The figures are believed to provide firm evidence of the fact that government has lost control over the Budget process. The political economy question remains: how has this situation come about, and numerous explanations can be put forward, all of them right to some degree or other. However, there is one which is not widely believed or discussed. This is a tendency to seek explanations in the individuals – both politicians and senior bureaucrats – who control the process. While they must shoulder the bulk of the blame, such an explanation is both wrong and dangerous. It is dangerous, since it misleads people when looking for solutions.

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These problems come from a more deep-seated malaise in our society. Society has a tendency to ignore the rules when it suits them. For instance, I may complain about the obstruction caused by other people double-parking outside the Banks in Samora Machel Avenue, but when it is convenient for me to do so, I will break the regulations as happily as they do. This may not seem to be connected to the budget deficit, but I believe that both problems stem from the same attitude. As a nation, we tend to support people who do things we like, even though they do them by the wrong means. How can I criticize Government for not sticking to the law when it suits them, when I practice exactly the same ethics?

This attitude may have evolved out of our colonial history – when laws were not made in the interest of the majority and compliance was based on fear not acceptance. Or it may have been bred in more recent times, as the example of the chefs has filtered into the consciousness of ordinary citizens.

Whatever its source, it is something that needs to be addressed urgently before it kills us. The danger of looking for explanations of the budgetary problems in the behaviour of individuals is that any change of Government that may be brought about will not solve the problem. The new incumbents will find themselves under the same pressures as the old and, with the same attitude to rules and norms, will believe that breaking the rules is justified since they have good intentions. What is needed is not a change of Government but a change in the style of government.

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Table 4.3: Comparison of Salaries and Allowances Bill in Ministries Between the 1999 Budget Including Supplementary Estimates and the Proposed Allocations for 2000