Sunday, 21 October 2018


The Daily News on Sunday’s Pauline Hurungudo sits down for a wide-ranging interview with former Finance minister Tendai Biti, who is also the deputy national chairperson for the MDC, about the state of the economy. Find below excerpts of the interview.

Q: What do you make of the 2 percent tax on electronic transactions imposed by Finance and Economic Development minister Mthuli Ncube?

A: Well, the decision to impose that tax, to vary that tax from 5 cents a transaction to 2 cents in a dollar, I think is a disaster, ill-thought, ill-informed, ill-founded and we are paying the price for it.

(Mthuli) Ncube is paying the price of it, because the response to that tax has been cataclysmic.

It knighted a chain reaction which he possibly could have foreseen. Prices have shot up, our inflation is way above 200 percent, goods have disappeared, and there are snake queues for gas in every quarter of Zimbabwe.

Q: There has been a legal challenge to the 2 percent tax? 

A: The court applications have been filed. It is blatantly illegal.

Q: Are you saying this was a purely wrong decision?

A: From a purely economic point of view, it was a wrong decision and that’s why I question Mthuli’s qualification and ability as an economist.

The challenge in Zimbabwe is of course that of the budget deficit, but the deficit has been created not because we are collecting less revenue, we collect around $400 million a month.

That’s a lot of money. The problem is actually the expenditure.

We are just spending and spending and spending, so if we were to go through structural reform, the major challenge should be retrenchment of your major expenditure lines.

We are spending too much on the wage bill, 90 or 95 percent is spent on over 200 000 workers on wage bill, so we have to reduce the wage bill from what it is right now, namely 95 percent total of expenditure to at least 30 percent of total expenditure, from the 25 percent of GDP wage bill to at least 7 percent of GDP.

Then you have got government appetite, it is killing this economy. Zanu PF’s insatiable appetite for goodies is killing this economy.

They spend on luxury jets, joints to the UN, Singapore, South Africa and Bali.  The delegation in Bali spent 12 days. What were they doing....? It’s ridiculous. 

Q: What needs to be done to contain this runaway expenditure by the executive?

A: We have to decapitate Zanu PF’s insatiable appetite for goodies. We have to devalue their appetite for champagne, for nice expensive perfumes and holidays, because it is costing the economy.

Look at their vehicles, if you go to Sam Levy Village, the most expensive cars belong to someone who is in government. So, that has to be entrenched but it requires political courage and conviction; and its certainly not there in Zimbabwe, in Mthuli Ncube and Emmerson Mnangagwa.

Thirdly, we have to deal with corruption in parastatals; millions of dollars are being lost in the parastatals.

Air Zimbabwe is making losses like $12 million a month but government keeps financing and funding it. We are spending billions of dollars through the GMB and the GMB perennially makes losses.

It is a dysfunctional institution. GMB and Air Zimbabwe alone are symptoms, indices reflective of what is happening in our country. The point I’m making here is the focus should not be on sources of revenue but curtailing expenditure; secondly, management of the economy.

Vane huyanga,vanotoda kubikirwa (They are clumsy, they are highly immoral. They need to be exorcised at a traditional ceremony.) They can’t manage the economy.

Q: Minister Ncube has said the people have to shoulder the pain of transformation, because no pain no gain.

A: They should take the pain. Are we the ones hiring luxury jets? Are we the ones driving limousines?

Are we the ones building castles on top of sands because of corruption? So why should people feel the pain?

The pain should be suffered by the regime. They must retrench expenditure. They must undergo structural reform.

They themselves created the mess, they must undo the mess, but unfortunately, they can’t undo the mess because undoing the mess means carrying out real reforms, but if they have to carry out real reform this country actually requires, it will have political implications.

They will be reforming themselves out of power.

As (Russian communist revolutionary, politician, and political theorist) Lenin says, “No class commits suicide.” They will never reform themselves out of power.

Q: What is your take on the debt overhang that Zimbabwe currently has?

A: Debt is what really worries me, because it means tax on future generations. So, your children, your grandchildren have to pay this debt. I said in Parliament the other day, a little child that is being born in Mbuya Nehanda Maternity right now has a debt of over $200 000. We are mortgaging future generations.

Is it right to mortgage future generations?

If you were to build roads, power stations, bullet trains, spaghetti roads, future generations would also use those stations.

Ninety percent of the roads we are using in Zimbabwe were built before 1980 but these people are borrowing for consumption, to buy cars, to buy perfumes for their girlfriends and boyfriends. That is ridiculous.

We have gotten so bad that our domestic debt is suddenly higher than our external sovereign debt; that is ridiculous.

That is unheard of. I am yet to research on it and ask my friends overseas if this is possible.   I don’t know of a situation like this. Your external debt must be more than your domestic debt.

Your external debt is USD and your domestic debt is hard currency accrued in domestic currency. In the olden days, it will be acquired by the Zimdollar and now it is the bond note and the RTGS and so forth.

When you see your domestic debt now exceeding your external debt, munengozi, munemashavi, munofanirwa kubikirwa doro remadzinza (it means you have an avenging spirit, you must convene a traditional ceremony to exorcise you of theft), it’s unbelievable. I’m yet to find a metaphor to explain this because it can’t happen, it is an aberration.

The thing which affects me about debt is the lack of a strategic solution to this debt problem.

This (Mthuli) Ncube is a total disaster. I was reading in the State-run media that he was pushing for Highly Indebted Poor country (HIPC) (a group of developing countries with high levels of poverty and debt overhang which are eligible for special assistance from the International Monetary Fund (IMF) and the World Bank) as a solution.

However, in his own midterm policy, he doesn’t talk about this, he talks about the discredited Lima process, the October 8th 2015 plan in Peru. Daily News



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