Zim to get supplementary budget

Zimbabwe will have its second supplementary budget in five years this year, after Finance minister Herbert Murerwa ended months of speculation surrounding the issue of additional funding for state operations last week, telling the country's parliament that a supplementary budget would "definitely" be tabled. Murerwa was responding to questions from opposition Members who wanted to know how the state intended to fund its spreading city clean-up operations as well as critical imports of food and fuel, shortages of which have adversely affected operations in the country.

The Finance minister said the supplementary budget would largely finance the costs of importing additional food supplies to lessen the damage caused by yet another drought, which has severely threatened the livelihoods of Zimbabwe's rural population. In the aftermath of Murerwa's announcement, speculation has now swirled around how much the supplementary budget will need to allow for, taking into account several other costs the government will need to meet. Analysts suggested to The Southern Times that the budget, to be tabled before parliament later this month could require a minimum of between $10 - $15 trillion to meet the costs of the food imports and other expenses up to the end of the year.

While declining to reveal the exact amount of the supplementary budget or when exactly it would be tabled before the House, Murerwa vindicated widespread speculation that the country would require additional funding, after the state said it would be importing large quantities of food to supplement a choking drought. Economists told The Southern Times last week that they expected the anticipated budget to be largely inspired by the huge food imports bill as well as expenditure for the expected senate and funding for new government ministries that were announced in President Mugabe's new cabinet in April.

Recent statements from government and Zanu PF officials indicated that the government would be spending about US$500 million ($5 trillion) on food imports, while the formation of a senate and the four new cabinet ministries would also require another $5trillion. "Then you must also consider that we also have had the huge salary adjustments for the public services that were awarded just before the elections and additional funding that has been channeled towards operations Murambatsvina, Restore Order and Garikai," said an economist with a local merchant bank. According to government figures, the total cost of the operations, which have seen informal traders and other illegal settlements being removed from undesignated areas, would be $3trillion, in addition to an estimated $1 trillion that has already been used in undertaking all of the programmes so far.

Concerns had arisen over perceived overexpenditure by government, with particular reference to the size of the development cabinet and a mooted Senate. Analysts have criticised the re-introduction of the Senate saying it should be delayed or cancelled, as it would worsen Zimbabwe's economic situation, considering that it would bring in extra expenses not provided for in the fiscal budget announced late last year. "This is clearly not the time to re-introduce the Senate, considering that Zimbabwe is reeling under an acute economic crisis. “The best thing would be to delay it until there is a meaningful turnaround to the economy, or better still, do away with the idea totally," said an analyst who refused to be named. Government has argued that the senate is necessary as a means of introducing checks and balances in the legislature.

The new cabinet saw the introduction of four new ministries — bringing cabinet portfolios to a total of 59 ministries that critics say would also have adverse implications on the economy due to the staff and operational costs that are expected to claim a huge chunk from national coffers in salaries and allowances. The ministries are reportedly still to be allocated their own offices. Economic analysts say the supplementary budget could be announced by the end of this month, following reports that ministries were operating on a hand-to-mouth basis and frequently asking the Reserve Bank of Zimbabwe to bail them out.

Government officials have refused to comment on the likely cost of the supplementary budget, with deputy Finance minister, David Chapfika saying it would pre-empt official processes. In the 2005 national budget, Murerwa predicted an expenditure of $27.5 trillion, against total income of $23 trillion, leaving a budget deficit of $4.5 trillion that was 5 percent of the country's total Gross Domestic Product (GDP). However RBZ statistics show that government's domestic debt so far has already reached more than $11 trillion — slightly less than half of total budget expenditure — and is expected to rise further as the government continues to borrow to fund its expenditure. The country's expenditure bill has grown even further amid indications that Zimbabwe needs slightly over US$1 billion to meet key imports up to the end of the year.

Government officials have said that the country requires US$60 million a month to import fuel, while the electricity import bill stands at US$12 million a month. Apart from the critical electricity and fuel imports, a poor agricultural harvest has also meant that government will need to import supplementary supplies of maize and wheat believed to total a combined 760 000 tonnes and costing about US$500 million. The statistics have brought Zimbabwe's "critical imports" bill up to the end of the year to slightly over US$1.1 billion (about $10.4 trillion at the official exchange rate). The government is up against crippling foreign currency shortages. In 2003 the government had a supplementary budget of $672 billion that followed a $770 billion budget. This scuttled efforts to lower the country's high budget deficit.