Thank you for allowing me to join in the debate of
the 2023 budget. Before I go into the merits, I want to express my
disappointment with the Minister of Finance, my colleague, for being
absent for two weeks. The budget is a national document and it is the
only statement by a Minister that is actually defined mandatorily in the
Constitution of Zimbabwe in Sections 302, 303, 304 and 305. In other
words, it is a constitutional obligation that the people of Zimbabwe have
placed on the Minister and I think the Minister should not undermine his
own budget by doing what he did.
At the same time, there was an Article 4, IMF Mission in the
country which has been here from the 1st of December, 2022. They have
just issued their interim financial statement which I am going to refer to
that he also abandoned that Article 4 because that Article 4 is so
important because you are giving an input and you know Mr. Speaker
that we are suffering under debt unsustainability and therefore it is
important to narrow the gap between us in the IFIs and that Article 4
Mission was very important.
Mr. Speaker Sir, when you read this budget, you get a sense that
the Minister was in a hurry. Maybe it was because his mid-term
statement was in September and then the budget was in November. I
have compared this budget and his previous budgets, some of the
passages are just cut and paste. The only thing that is done is to
modernise the figures. I think he needs to take time when preparing the
budget because it is a national statement. I do not think he afforded it the
same concentration and quality of attention that is required in what is
clearly a cerebral process. So there is a lot of cutting and pasting and he
bears final responsibility because he is the Treasury. He is the Minister
as defined by Section 7 of the Public Finance Management Act.
Our economy is facing serious structural problems. If you read the
World Bank country report of October, 2022, it speaks of 65% of our
population being in the informal sector. That is a frightening figure and
that report says that for this economy to attain the vision 2030 being
espoused by the authorities, our economy needs to grow from 2023 by a
figure of 15% per annum and we are limping at around 1%/2%. Eighty-
nine per cent of our people are living in extreme poverty. People are
wallowing in poverty. These are serious things.
One of the things that are most worrying in that World Bank
country note is the fact that out of 17 countries that they examined, we
are second from last in terms of productivity. This economy is not
productive. These are some of the things that we thought the Minister
would address. I want to come to the actual budget. The first thing that I
want to deal with is the credibility and legitimacy of this budget. In an
economy that is now so dollarized to the extent that 72% of the
transactions that are being done in Zimbabwe right now are being done
in USD; the USD is on a cash economy. A credible and legitimate
budget could and should have been expressed in USD.
If you look at the 2022 budget, we made the same point that the
budget should be expressed in USD. The Minister did not listen to us
and the net result was that by mid of 2022 in July this year, he had come
with a supplementary budget that was 200% bigger than the original
budget. His original budget was for ZW$700 billion. We increased a
supplementary budget of 1.9 billion, almost 2 billion dollars. So for the
sake of legitimacy and credibility, the budget ought to have been
expressed in USD.
The second thing on credibility is the growth projection of 3.8%
and I want to echo what we have said in the Budget Committee that your
assumptions do not support the 3.8% growth rate. Moreso, in light of the
fact that the regional economic outlook produced by the IMF of
September 2022, predicts that…
THE HON. SPEAKER: Order, Order. There are two people who
are taking an audio of what you are speaking – please stop it. If you
want to follow what is being said, you can always check in the Hansard.
HON. BITI: So that regional economic outlook says that the
economies that will do well in sub-Saharan Africa, the growth will be
around 1.5%. It is hard to imagine where the 3.8% is going to come from
particularly in light of reduced agricultural output acknowledged by the
Minister in his budget, the absence of power which was one of the
anchors of his macro-economic assumptions. The third thing around
credibility is that the budget is a ZW$4.5 trillion yet the growth rate is
3.8%. Theoretically, the budget must grow and the revenues must grow
by 3.8% of the 2022 budget which was ZW$1.7 trillion.
So the growth of the budget from ZW$1.7 trillion to ZW$4.5
trillion is not supported by the 3.8% growth rate which he is targeting.
This means that this is a budget that implicitly accepts that the inflation
rate of this country will remain at above 200%. The growth of the gross
figure of the budget from ZW$1.7 trillion to ZW$4.5 trillion can only be
supported by the inflation figure of over 200% and that is most
unfortunate when a Minister has to budget for such growth levels of
inflation.
The fourth thing on credibility is on disbursements. If you read the
supplementary budget, by September of 2022, the average disbursement
was a mere 36%. We acknowledge as we do in our statement from the
Budget Committee that there are four ministries that have overspent.
There are four ministries that have gotten the lion’s share but the rest of
the ministries, the budget outturn has been 36%, meaning that what we
are doing is just a waste of time because money is not going to be
disbursed except to those four privileged ministries.
Number 5 on credibility is that we come here, we approve this
budget but there is a parallel budget that operates somewhere. There is
parallel expenditure that operates somewhere and as I am talking to you
right now, there are taps that are open somewhere that we will see
two/three years later. As I am making these submissions, we have before
this august House two Financial Adjustment Bills. The first Financial
Adjustment Bill is for USD10.6 billion. We have not approved that
Financial Adjustment Bill.
In other words, over and above what we agreed on, Government
went on to spend USD10.6 billion. As I am talking to you, there is a
second Financial Adjustment Bill of 100 billion dollars and six billion to
make 106 billion dollars in respect of the financial years 2019/2020,
meaning that what we are doing again is exercising self delusion because
there is a parallel budget that is being run oblivious to this august House
and that undermines our work and credibility.
Mr. Speaker Sir, I have referred to the Article 4 Mission that was
in the country. They have just issued their preliminary statement and
they make four fundamental points that we have been making to the
Minister which this budget ought to have addressed.
The first point that they make is that the exchange rate should be
liberalised. We have been arguing with the Minister for the last four
years that you cannot de-dollarise as he tried to do in February of 2019
when conditions for de-dollarisation did not exist and we know that dedollarisation has failed and the Government itself is the first character to
acknowledge the failure of de-dollarisation. All Government charges,
without exception, are now expressed in USD terms, whether it is
passports, fuel, birth certificate, death certificate, licencing, number
plates for vehicles, et cetera.
So, the biggest undermining of the de-dollarisation process has
been the Government itself but we said you can use the Zimbabwean
dollar, there is no problem but float the Zimbabwean dollar. Let the
Zimbabwean dollar be floated, let it find a natural mark in the market;
that did not take place and as a result, what we saw is massive arbitrage.
The same budget will tell you that since June of 2020 to now, the
auction system has disbursed USD 3, 6 billion but the economy has
nothing to show for that. It is a lot of money.
The elites have been accessing cheap USD for two years at an
average exchange rate of 1:83 but the parallel exchange rate in the
streets has had a premium of 200 to 300%. People have made money
out of speculation on the Zimbabwe Dutch Auction System, which is
why as a Committee, we have recommended that there should be the
introduction of a Wealth Tax so that we can net these speculators who
have taken advantage of this loot and booty of the Dutch Auction
System.
Another recommendation that is made by the same Article 4
Missions, today, namhla, khathesi, you must abolish the gold coins. We
have made the same point that for a country with a weak currency like
ours, for a country with a weak current account like ours, do not take the
figures he gives in the figures; the reality of the matter is that we have
got a negative current account, capital account; he will tell you
otherwise that the import pressures of this country are too much we need
to import fuel, food, electricity, so there is no way we can have a current
account surplus. However, that is an issue for another day.
My point is; in a country with a weak currency, we need to keep
our gold, to preserve our gold but instead we are now minting that gold
and selling it at a price which is 200% less than the true value of that
gold. The going price of an ounce of gold right now is USD1800. We
are selling that gold in its currency form at USD1200. We have spent
over 18 billion USD printing gold coins but what we have gotten in
return is around nine billion dollars. Who does that – no sane, objective
person does that.
The third thing that the IMF recommends which we have also
made to the Minister is that you must live within your means, you must
eat what you kill, and you must maintain a fiscal consolidation. That has
not been happening. The Government has been printing money, the
Reserve Bank has been printing money, and quasi-fiscal activities are
now at least 20-30% of GDP. If you look at the budget itself, I think it is
paragraph 93, it will tell you that between January and September of
2022, broad money which economists like Hon. Prof. Mashakada there
will tell you, grew by 400%. In other words, we generated hot air of
400% into the economy.
Mr. Speaker, when too much money chases too few goods, you
have a crisis of over accumulation. Like in 2008, we all became
trillionaires but trillionaires who could not buy a bottle of soda water.
Your Members of Parliament, we earn ZWL 200 000 per month but we
cannot pay rent Mr. Speaker. The salary we earn cannot fill even a fuel
tank to go to Dotito to plant maize. That is the crises of over
accumulation. We have made arguments in the past that there is need to
rationalise the activities of the Central Bank, the Article 4 Mission also
makes the same recommendations.
However, I want to come to the real economy Mr. Speaker Sir.
Our economy needs to deal with certain fundamental structural issues to
move forward. The first one is the issue of debt; the debt levels
produced by the Minister shows that we are around 18 billion dollars.
That is not the real issue; the real issue is that our debt as a percentage of
GDP is now around 102%. The acceptable threshold, the SADC
convergence threshold is 60%, so we are way above. Debt puts a
premium, a tax on future generations and our debt and the obligation to
deal with our debt is a developmental issue. We defaulted way back in
- However, because we have got huge arears around two billion to
the World Bank, around 600 million dollars to the African Development
Bank, five billion dollars to the Paris Club of Lenders, we need to deal
with these arears so that we can access the huge amounts of
developmental funds that are sitting at the African Development Bank.
Resolving our debt crises de-risks Zimbabwe, lowers the risk profile of
Zimbabwe.
So, I am disappointed personally, that when you read the Budget
Statement, there is no plan for debt. As a Committee, the IMF Mission
yesterday, one of the things we raised was, when are we going to get the
next Staff Monitored Programme (SMP) because it is both quantitative
and qualitative? It at least tries to show some track record of
performance. We do not have that since the collapse of the last SMP in
April of 2020. So we are doing nothing, we have spent five years doing
nothing; at least Minister Chinamasa tried his Lima process in October
of 2016. It may have failed but at least there was effort, so you give him
two out of 10 for the effort but my brother, you cannot give him
anything – so, that is sad.
The second structural issue I want to deal with is agriculture. We
have mismanaged agriculture and one of the reasons why we have
mismanaged agriculture is the unsustainable interest rate of 200%. If
you want the economy to raise an interest rate of 200% which interest
only benefits bankers, there is no savings rate of 200%; in other words,
if you put your money in your bank, you are not going to get 200% but if
you lend, you are going to be charged 200% plus charges. It means the
effective lending rate in Zimbabwe is 280% and that is not sustainable.
So, we are going to shrink this economy, output is going to
decrease; in my own calculation, if you get 1, 2% growth rate, you will
be very lucky. Thanks to that punitive interest rates but it is killing
agriculture, and as I am speaking to you right now, a bag of 25 kg of
maize, whether Mbizi or Mbada is 90 USD. A bag of compound D is
USD45 or USD50, a bag of ammonium nitrate is USD70; if you find it.
Where I come from in Chiendambuya, they add USD80. How can you
plant anything? A hectare you need USD600 yet we are USD 600 if you
look at us kudhara kudhara, we have no money. So agriculture is being
killed. What we suggest Mr. Speaker, is that if you look at the budget,
the Minister proposes to give special certificates to Model A1 and A2
farmers which are bankable, why play around with these fancy
instruments that have no legal basis? Why not simply introduce title
deeds to farmers on Model A1 and A2 farmers? That is what the
Constitution says anyway in Chapter 16, so that farmers can go and
borrow cheap money. If a farmer is going to borrow at anything more
than 5%, he might as well shut down. That is why Mr. Speaker right
now, if you go to places like Gokwe, throughout the country, you will
find Command Agriculture inputs being sold on the streets because it is
cheaper and more profitable to sell the inputs than to put a badza or a
gejo in the field and to plant.
The second structural issue Mr. Speaker Sir is the energy. We had
the Minister of Energy yesterday, the esteemed Hon. Zhemu Soda. We
have a crisis Mr. Speaker. If you listen to him carefully, his only answer
is ‘I hope to import more’. He is hoping to import 500 megawatts from
EDM in Mozambique and from the SADC power pool but there is a
deficit in the entire region. Eskom, South Africa has a black-out –
welcome to Zimbabwe, Zambia – same thing. There is a regional deficit.
If the strategy of the Minister is to import when everyone is in a net
deficit position, it is a disaster but this economy cannot move Mr.
Speaker without addressing the issue of power.
The third issue is the issue of mining. Mining can transform this
country. This country can be a $200 billion economy purely on the basis
of mining but we have to do certain things right. Firstly Mr. Speaker, we
cannot give away our mining rights as if they are cakes at a wedding.
Anyone who wants, we give him a lithium mine. Anyone who wants, we
given him iron ore. Anyone who wants, we give him diamonds. Anyone
who wants, we give him platinum. Manhize is sitting on 43 billion
metric tonnes of iron ore – the biggest in the world. We gave them for
free. I was very hurt Mr. Speaker by a company called Karo Investments
or Tharisa. They got a special mining lease. To get a special mining
lease, in terms of Section 139 of the Mines and Minerals Act, you must
show the authorities, Minister of Mines, Hon. Chitando that you have
got USD100 million. So they came here with nothing then they list on
the Victoria Falls Stock Exchange some bonds to raise money to mine
our minerals. They raised $34 million. Are we that foolish Mr. Speaker
with great respect? We give away our mining concession for nothing,
then we allow that same person kuti korokoza tumari twedu twatinatwo
muhomwe and we say we are governing the country.
Mr. Speaker, it cannot be right. Let us get our mining right. The
issue of licences and leases, let us auction them. They should go to the
highest bidder. We get our qualified economist, lawyers, accountants
and they do the cadastral surveys, evaluate and get best price. We call
sharp people from South Africa, Botswana with experience and we
auction our mining rights. How much money do you have? What are you
going to do in the next five years? Mr. Speaker, we are giving platinum
licences but there is no single refinery in Zimbabwe. One of the things
that my esteemed friend has done in the budget is to introduce, through
S. I. 89 of 2022, the payment of royalties in alternative minerals. How
does it work Mr. Speaker? Take platinum, it has got six to ten PMGs
derivatives and you do not know what is in a tonne. The soil you extract,
it has to go to a refinery and we do not have a refinery here. So it will go
to South Africa where they tell us whatever they have found because we
are not there. Then we are now expecting them to drive lorries to bring
the 50% of the royalties – to drive them where Mr. Speaker? It does not
work Mr. Speaker. I can understand gold because it is fungible. It is like
oil. I can understand a law that says 50% of our gold royalties should be
paid as gold because it is fungible and it is a reserve but what about coal,
what about platinum, chrome? It does not make sense. The point I am
making is that if we get our mining right, we can transform this country.
The fourth issue is our model of accumulation…
[Time limit]HON. P. D. SIBANDA: On a point of order Mr. Speaker. With
your indulgence, Hon. Biti is not only a former Minister of Finance, he
is the shadow Cabinet Secretary for Finance in this country. Therefore, I
plead with you Mr. Speaker that he may be given an extra 10 minutes to
exhaust his points.
THE HON. SPEAKER: Order. Why do you not make your
request without embellishment? In terms of our Standing Order – [HON.
MEMBERS: Inaudible interjections.] – Order. When you speak you do
not have to clap your hands please. Use your voice. In terms of our
Standing Orders, you are allowed extra five minutes Hon. Biti, if you
may please wrap up your contribution?
HON. BITI: I will wrap up. So Mr. Speaker, we need to start
afresh. Mining can change our country. Mining can transform our
country. I had started talking about our accumulation model. If you look
at the structure of our economy, our economy is designed to extract and
export. The two major activities in our economy are mining and
agriculture. If you take agriculture, it is designed for export. Ninety per
cent of the tobacco that we produce in this country goes out of
Zimbabwe. Tobacco like cocoa, the farmer gets 2% from the value chain
– he gets nothing. I live along Enterprise Road, everyday there are
literary hundreds of small little trucks full of women and men from
Mutoko selling tomatoes. They have been doing that for the last hundred
years. The more they sell, the poorer they become and the reason is
because of our accumulation model.
I have said before, if you wake Cecil John Rhodes today he will
not get lost because Zimbabwe, 44 years after independence is still
structured like Southern Rhodesia, like Rhodesia. It has not changed
because we are still exporting raw materials. I urge the authorities, the
Minister, to ensure that there is value addition in this economy, to ensure
that there is manufacturing in this economy, to ensure that there is
beneficiation in this economy. Countless trade policies have been
written which speak to the same thing but nothing has been done.
One small point on agriculture Mr. Speaker Sir, the marketing of
agricultural goods is killing the farmer, earning the farmer RTGS76
thousand for maize and USD90 when you have spent USD300 does not
work. I urge the Minister to have the courage of introducing a
commodity exchange so that the person who sells maize is in the same
position as the person who sells tobacco. He goes to the market, gets his
money and goes back home. The marketing model needs to be changed.
I want to come to the taxation review. One of the problems I have
with my friend, the esteemed Minister of Finance, an approach to
taxation from the point of view of government coffers, just getting
money. Tax used wisely is a tool for progressive social intervention.
This business of increasing VAT is not only cruel but it is uneven and
unequal because the person who stays in Borrowdale will pay the same
15% as the person who stays in Buhera, Chiendambuya, Dotito,
Tsholotsho or Nkayi. The same applies to the Intermediated Money
Transfer Tax, we do not need that. We are one of the few countries in
the Sub-Saharan African region who has that. The IMTT punishes the
small person because it is the small person who goes into a bank and at
the ATM but rich people do not do that Mr. Speaker Sir. So why are
you punishing the poor? IMTT must be scrapped Mr. Speaker Sir.
Now I want to make the following recommendations to the
Minister through you Mr. Speaker Sir: - Express this budget in US dollars. It is clear that your
budget was US$4.5 billion. So just say it as it is. - Make timeous actual disbursements to ministries.
- Pay special attention to education and health as these
are drivers of the nation. Mr. Speaker, when I went to University
in 1986, the esteemed Minister was my senior. He was doing his
Masters when I was doing my first degree. I know for sure that if
he had not gotten the education that President Mugabe gave him,
he would be herding cattle somewhere in Tsholotsho. - Scrap the auction. I read something on the Reserve
Bank talking of opening the auction on the 9th
January 2023.
Please scrap the auction, scrap the US dollar and pursue fiscal
consolidation, the issue of debt and issue of title deeds to people.
Reduce and scrap VAT and the IMTT. - Lastly, please respect the budget.
