He said the fiscus could only fund a third of the votes
demanded by the ministries for expenditure next year.
Various reports by Parliamentary Portfolio Committees on
the 2023 national budget pointed out that ministries were grossly underfunded.
“I have listened carefully to all presentations by
portfolio committees. There is not a single portfolio committee that (is happy
with the budget allocation for the ministry that they supervise.) They all said
it is inadequate, and that is what it is frankly. It may be inadequate, but we
have to live within our means. You will notice that I presented a budget of
$4,2 trillion, but the bids were three times this figure,” Ncube said in
Parliament on Tuesday last week.
“Clearly, we cannot support that kind of expenditure
request. We just do not have the resources. The resources that we can reliably
generate are just over $4 trillion. We have always said, in terms of the Public
Debt Management Act, debt should not go above 70% of gross domestic product
(GDP) and we are straining ourselves not to breach that because the higher
expenditure means that we have to borrow more, and we end up breaching the
hurdle and that is not good for us.
“On the issue of underfunding — that we are not giving
ministries what they request for — ministries are always requesting three times
the revenue that the economy can generate. This economy is stuck somewhere at
around 80% of the GDP in terms of revenue to GDP ratio. That is all it can
afford and you cannot extend beyond that 80% of GDP. It is not even underfunding.
We are funding what we are able to fund with the resources we have.”
Legislators complained that Ncube has been disbursing
budgeted resources to ministries and government departments very late.
This, Ncube explained, was a result of the current cash
budgeting system being implemented, which entails that government spending is
restricted to revenue collected only.
“You can only spend what you have collected. Some put it as
‘you eat what you have killed’. You cannot eat more than what you have killed
unless you borrow someone’s kill. We have to do this with no recourse to the
central bank,” he said.
Previously, government would borrow from the central bank,
but this was stopped in 2019 in order to comply with the Public Finance Management
Act.
In the event of shocks, Ncube said Treasury would seek a
supplementary budget.
Ncube also dismissed calls by legislators to dollarise the
economy, saying government would maintain its multi-currency regime.
Members of Parliament said the local currency had become
too weak to the extent that it had made the budgetary process a nightmare.
“We have allowed the USD [United States dollars] and ZWD
[Zimdollar] to circulate and be used freely. So, anyone can pay in USD and
receive USD. I would not even use the term dollarisation, both the ZWD and USD
are our currencies as of now. There is no issue of over-use of the USD or
under-use of the ZWD. We are using both those currencies and that is a policy
that we said we will maintain because of the peculiarity of our situation,”
Ncube said.
“You will have noticed in the last few weeks or months
perhaps that the gap between the official rate and the parallel rate has
narrowed. If you believe that the parallel rate is a freely floating rate which
has narrowed the gap with the official rate, surely that tells you that the
official rate is as close to freely floating as possible. That is what it tells
you.”
The local currency has been fast losing value against the
greenback, forcing some companies to price their goods and services exclusively
in foreign currency, mainly the United States dollar to hedge against losses. Newsday
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