FINANCE and Economic Development Minister Professor Mthuli
Ncube is set to present the 2020 national Budget on Thursday, with industry and
citizens expecting better economic fortunes following the numerous challenges
experienced since the launch of austerity measures.
The 2020 Budget is expected to be about $28,5 billion,
which could be revised upwards by a factor of above 30 percent in view of
inflation.
This requires Prof Ncube to make a serious balancing act to
cater for the expectations of the nation.
Both President Mnangagwa and Prof Ncube have hinted that
Zimbabwe was now moving out of austerity, and galloping towards economic growth
driven by increased production and the Budget is expected to announce several
measures that promote industry and agriculture.
Our Harare Bureau understands that the Budget will not
announce any measures that will shock the market, but those that seek to grow
industrial capacity and safety nets to cater for the vulnerable.
Measures aimed at addressing the high transport costs will
continue with more Zupco buses set to arrive from South Africa, Belarus and
China, while more kombis will be co-opted into the mass urban transportation
strategy.
The Budget is expected to announce measures that ensure the
objectives of Transitional Stabilisation Programme (TSP), Zimbabwe National
Industrial Development Policy and Local Content Strategy, are met.
Some of the measures include provision lines of credit
through credit guarantees, venture capital and tax incentives, to boost operations
and accelerate job creation, and help in the attainment of Vision 2030 of an
upper middle income economy.
The Industrial Development Corporation (IDC) is also set to
be capacitated so that selected strategic industries are nurtured.
Confederation of Zimbabwe Industries (CZI) president Mr
Henry Ruzvidzo last week said industrialists expect measures that will
stimulate capacity utilisation.
Mr Ruzvidzo also wants Government to pace up the
construction of the Harare-Beitbridge highway, which is seen as critical in the
transportation of goods.
He said the observation by the Monetary Policy Committee
(MPC) that fundamentals for economic growth were now in place, “is a profound”
because it shows there is light at the end of the tunnel.
“As industry, capacity utilisation is below 40 percent,
probably in the lower 30s. Depending on what we do from here going forward, it
is a huge opportunity of growing the economy from because if we only take that
capacity utilisation up to 70 percent, up to 80 percent; very quickly we have
the economy responding,” Mr Ruzvidzo told the Economic Development and
Financial indaba on Thursday.
“So in the budget, we expect measures that will induce
utilisation of that idle capacity. These may include reduction of the tax burden;
I think the position of the CZI on the 2 percent intermediated transfer tax is
well known, we have lobbied (and) hopefully the minister will come up with some
measures that address our concerns.”
However, Prof Ncube has said the 2 percent tax will stay
since it has helped Government to raise funds for infrastructure development
and payment of salaries for about 3 000 teachers recruited this year, among
others.
Industry also wants the Budget to address the “regulatory
burden”, which sees investors contending with numerous laws from company
formation, to production and exportation.
Prof Ncube has said the issue of too many laws will be
addressed under the auspices of the ease of doing business reforms.
Mr Ruzvidzo said industry wants measures that improve
market access through discouraging importation of products that can be produced
locally, a move that also saves forex.
Industrialists and employees also expect the Budget to pay
attention to economic enablers, especially electricity and water, which have
constrained operations.
Erratic electricity and fuel supplies have seen some
companies scaling down and employees were rotation, which affects their
earnings.
Employees also want the Budget to expand the tax-free
threshold to about $3 000 from $700, to give them more disposable income.
Economic commentator Mr Langton Mabhanga expects the Budget
to have measures that promote “high productivity”, pro-youth economic
programmes, a jobs creation strategy and a strategy to transform the health
sector. “The minister (Prof Ncube) must also lift the nation’s spirit by
profiling the yield of austerity measures, including price and currency
stability, road to single digit inflation.”
Mr Mabhanga also wants Prof Ncube to protect Fidelity
Printers and Refiners (FPR)’s schemes from being turned into avenues that “prop
the gold black market”. Chronicle
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