Zimbabwe's Finance Minister Biti Unveils 2011 Budget, Anchoring Economic Growth to Political Stability
FM Biti said the growth of the economy next year will depend on several factors including political stability in the country
FM Tendai Biti said the nation’s economic growth will be dependent on political stability, performance of the mining sector, high agricultural productivity and various macro-economic fundamentals. Zimbabwe’s Finance Minister Tendai Biti on Thursday unveiled a US$2.7 billion budget for 2011 which almost entirely depends on local resources. At least US$500 million of the budget is expected to be sourced from donor partners, most of whom continue to withhold aid crucial to reviving the staggering economy. Total domestic budget revenues of US$2.7 billion are projected for 2011 with anticipated external funding pushing the overall 2011 budget estimate to US$3.2 billion. Biti said indications are that developing partner support in 2011 will largely be channeled outside the government budget system. Donors pledged US$810 million in support of the current budget but only disbursed US$360 million, none of which came under the rubric of the budget framework. “I have, therefore, maintained cooperating partner support for the vote of credit at no more than US$500 million. This would augument our envisaged revenue performance for next year of US$2.7 billion, bringing the overall 2011 budget estimate to US$3.2 billion,” said Biti. He said the national budget is premised on a macro-economic framework which projects growth of about 9.3 percent and average inflaton levels of about 4.5 to 5 percent, translating into nominal Gross Domestic Product of about US$8.07 billion. He said dependence on external funding of the economy has raised serious challenges, and as a result, the nation will not rely heavily on the projected US$500 million expected to be sourced from various countries. “Of the proposed 2011 budget of US$2.7 billion, I propose applying US$2.2 billion or 80 percent towards recurrent expenditure,” he further said. “Of this amount, the wage bill places a big challenge when looked at against all the other requirements including support to health and education delivery services, agricultural services, social protection, payment of service providers and maintanence of infrastructure.” Biti said the nation’s economic growth will be dependent on political stability, performance of the mining sector, high agricultural productivity and various macro-economic fundamentals. For the first time in years, Biti allocated the largest chunks of the budget to the education, health and agriculture ministries. He said Zimbabwe’s economy has become a supermarket economy with imports outstripping exports, a situation which he noted needs to be rectified in order to boost revenue inflows. He further increased the tax-free income thresholds from the current US$175 to US$225 in an effort to ensure that workers have disposable income to make ends meet. To boost the moral of workers, the minister also revised the tax-free bonus threshold upwards from US$400 to US$500. He set aside US$1.4 billion for civil service remuneration, almost twice the US$773 million allocated in this year’s budget. Of this, at least US$1 billion will be devoted to the provision of remuneration for state workers while US$300 million will cover pensions, medical aid and social security contributions. Disgruntled civil servants are likely to get a 100 percent salary raise next year. Some Harare-based economists have welcomed Biti’s 2011 budget proposals for increasing money to social service ministries but they warn that the political environment prevailing in the country remains key to the country’s economic growth and improved lives for the ordinary people. Zimbabwe Coalition on Debt and Development economist Masimba Kuchera and Business Forum secretary Roy Magosvogwe also commend Biti for being realistic enough in his proposals, especially as donors continue to hold back aid. Magosvogwe told VOA Studio 7 reporter Patience Rusere that 2011 Biti's budget was both developmental and people-orientated. VOA Studio 7 correspondent Irwin Chifera reported that Biti's budget was well-received by many ordinary Zimbabweans.