THE era of painful austerity measures is over and the
country should brace for positive growth and productivity in 2020, the Minister
of Finance and Economic Development, Professor Mthuli Ncube, said yesterday.
In an interview with Zimpapers Television Network (ZTN),
Prof Ncube said the painful reforms adopted by Government since late 2018 have
laid a solid foundation for future economic growth with macro-economic
indicators also pointing towards a favourable trajectory ahead.
The country’s economy is expected to register a growth of
plus 4,6 percent in 2020, from a negative three to six percent this year, said
the Minister. He said the projected growth next year would be driven by several
factors.
“First of all, we expect better rains in the 2019/20 season
because that will mean agricultural output will pick up again. It also means
the power outages that you see will ameliorate because we can have more
hydro-power when water in Kariba is up,” said Prof Ncube.
“But also, we expect the budget to be more supportive of
growth. We have said the 2020 budget is about growth and productivity in the
main and job creation, supporting competitiveness and of course making sure
that we have shared growth.
“So, that stance on growth and productivity, away from
austerity – we have done austerity and it has served us well, it has created a
good base and allowed us to do a lot of reforms, which have been painful. Now
we’re ready to move to the next stage, which is to stimulate growth.”
The Minister also gave a brief outline of some of the
strategies to be implemented to consolidate the projected growth, which will be
fully captured when he presents his 2020 national budget before the end of the
year.
“We want to make sure that we give incentives for
production, we want to make sure that we crowd in the private sector in
financing. We want to make sure there is easier access to credit from the
private sector across all the sectors. All those issues will contribute to a
positive rate of growth,” said Prof Ncube.
While acknowledging industry calls to ease the tax burden
by probably scrapping the two percent transactional tax, which is seen as
double taxation on those already complying and its impact on increasing the
cost of doing business, the Minister said the tax head would remain given its
benefits to the fiscus.
“We’ll not scrap the two percent tax because it helps us on
the compliance front. It is assisting in compliance by registered formal
business, then there is compliance by the informal as well. So, it’s (2% tax)
fantastic for compliance and it is clearly filling a gap of making sure there
is compliance,” said Prof Ncube.
“In terms of lowering the tax burden, I cannot pre-announce
what I will say in the budget. All I can say, generally, because we want to
support growth and productivity, one of the things we will look at is obviously
incentives and tax adjustments but I cannot comment on the two percent tax
specifically.”
On Monday Cabinet received the Minister’s 2020 proposed
Budget Strategy Paper, which took note of the ongoing reforms that are premised
on the 2019 national Budget theme: “Austerity for Prosperity”, as outlined in
the Transitional Stabilisation Programme (TSP). The budget strategy document
also outlines notable milestones that include fiscal consolidation, monetary
policy restoration, liberalisation of the foreign exchange market,
re-engagement and a number of governance and structural reforms aimed at
improving the business environment and supporting the productive sectors.
The year 2019 has not been good for Zimbabweans as the
economy suffered from unforeseen but “severe exogenous shocks” arising from the
El Nino-induced drought and Cyclone Idai, which constrained agricultural
activities and electricity generation, bringing about general underperformance
of the economy.
The situation was compounded by price escalation and loss
of consumer buying power due to rising inflation. However, Treasury expects the
situation to stabilise in the short term on the back of continued
implementation of fiscal and monetary reforms, supported by structural and
supply side measures. Herald
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