HARARE – Finance and Economic Development Minister Mthuli Ncube is expected to deliver his statement on the mid-term review of the 2019 budget today, amid high expectations for measures to improve disposable income, boost production and to protect the value of the local currency.
Little or no shock therapy interventions are expected from the minister’s budget review, but measures to facilitate consolidation and the march to prosperity, after he recently said that major reform measures had been completed.
The Treasury chief has said publicly that after a series of policy reforms since his $8.2 billion 2019 budget last November, the focus has shifted to increasing output.
However, there could be a supplementary budget up its sleeve as a result of monetary reforms which would see the introduction of a local currency which has lost ground against major currencies.
The statement comes amid tighter exchange rates, high inflation, ongoing blackouts, weak industrial production and tight liquidity, among other issues the budget needs to address.
The economic reform measures of Minister Ncube’s Transitional Stabilization Program (TSP), aimed at correcting the ills of the past, have inadvertently made life for the majority unbearable.
These include the separation of nostro and RTGS accounts, the liberalization of the foreign exchange market and fuel supply, the introduction of a temporary currency tax of 2%, the repeal of the multi-currency regime and the return of the local entity as sole legal tender.
Meanwhile, Zimbabwe’s annual inflation rose from 5.39% in September 2018 to 175.66% in June 2019, raising fears of a repeat of the crisis and hyperinflation that rocked the country during the 2008 decade.
More recently, inflation has been largely fueled by high premiums from the foreign exchange black market, where a number of companies have purchased hard currency to import goods. including raw materials used in production.
As the country’s inflation rate soared, employee wages and salaries largely stagnated, leaving most basic commodities out of reach for the majority.
Similarly, the value of pensions has eroded; the second time in two decades.
Economist and former Bulawayo East MP Eddie Cross said it was crucial for Minister Ncube to report on how far he has come with reforms under the TSP.