ZANU-PF and MDC-T play blame game on austerity measures

At last week’s special Cabinet session, Finance Minister Tendai Biti presented a catalogue of measures he wants implemented to assist various government ministries but the fractious unity government could not come to an agreement.

While Cabinet approved the proposals, ZANU-PF hardliners are forestalling their implementation  

Immediately after the Cabinet meeting, the ZANU-PF spin-doctors blamed some of the draconian measures on the MDC-T headed by Prime Minister Morgan Tsvangirai, an indication that there is no longer collective responsibility in government.

While on paper ZANU-PF adopted market-oriented policies when it took steps to deregulate the economy in February 2009, the highlight being the introduction of multi-currencies, in practice the party still favours a populist approach, particularly as the country prepares for make-or-break elections.

The MDC-T as the proponent and executor of the austerity measures, cannot go back on their word without suffering a credibility crisis.

President Robert Mugabe has also told his party’s Women League that he was not happy with the manner in which Biti was presiding over the country’s economic matters.

The ZANU-PF leader cited the loss-making Grain Marketing Board which he said was struggling to feed the nation because it was no longer allowed to borrow money to finance its operations as it used to do in the past.

While Biti blamed illegal recruitments by the police and army for bleeding State finances dry, Mugabe left half way through to preside over a police pass-out parade following recruitments the Finance Minister had said were not sanctioned.

In an interview with The Financial Gazette this week, Biti remained hopeful that, if fully implemented, the measures would help the country’s economy to recover.

Biti has proposed drastic cuts in foreign travel, which as of the end of May, 2012 cost US$46 million.

Both President Mugabe and Prime Minister Tsvangirai have been accused of having a penchant of travelling outside the country with huge delegations at a time government is battling to fund operations.

Biti is also proposing the disposal of loss-making entities and freezing civil servants salaries, which has not gone down well with the public workers who earn well below the breadline.

Presently, most civil servants take home about US$250 per month, against a poverty datum line of about US$500.

There is also a strong push from the MDC formation, which is being resisted by ZANU-PF hardliners, to close perceived loopholes and funnel all the diamond revenue towards funding government operations and resuscitating the country’s economy.

Biti is also advocating for the settlement of internal debts between ministries, departments and other public entities to allow them to function properly.

Between them, government departments and entities owe each other more than US$200 million.

For instance, government departments owe Net*One US$41 million, CMED (Private) Limited US$9,2 million, ZESA US$22,7 million and local government authorities US$44,2 million.

The government also owes its foreign missions. As of December 31, 2011 the diplomatic missions were owed US$24 million. Local fertiliser and agricultural firms are also owed US$57 million for inputs.

Some ministries are said to have gone for more than four months without getting reimbursements or funding from the Ministry of Finance due to a severe financial squeeze in government.

While agreeing that the government was technically broke, Biti said money has to be found to deal with the domestic debt suffocating most ministries and government departments since a huge inter-parastatal debt would have the effect of defusing the already severely undercapitalised State-run firms’ capacity to deliver crucial social services to the economy.

ZESA, for instance, has battled to generate enough power to drive industries, which themselves are warning of a slowdown unless swift intervention is made to improve electricity generation.

At the same time, giving government the daunting task to settle debts incurred by State-run firms’ globe-trotting chief executive officers and officials would be as good as condoning inefficiency and mismanagement of the public funds that they control.

“We don’t want heads of ministries or departments even local authorities to use this money to buy 4x4 vehicles,” Biti said.

Biti said it was prudent that the government deal with the rot at ZIMRA and the other revenue collecting agencies, saying corruption at some border posts was bleeding the government dry.

For instance, he said, the government was losing US$45 million per annum through delays at Beitbridge Border Post, the country’s busiest point of entry.

While imports are over US$2 billion annually, the country is only realising US$150 million in duty. He is also proposing sweeping reforms at ZIMRA and at the State Procurement Board, accused of cherry-picking companies for lucrative  government tenders.

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