Prof. Mthuli Ncube reminds Biti he did nothing on Zimbabwe’s debt as Finance Minister, says NO NO to budget in US dollars




Prof. Mthuli Ncube and Tendai Biti

HARARE – Zimbabwe Finance Minister Mthuli Ncube told former Finance Minister Tendai Biti that he did nothing about clearing the country’s debt when he was minister during the inclusive government.

Ncube told Parliament: “Hon. Biti insinuated that we do not have a debt arrears clearance plan, we do. If I can challenge him – when he was Minister of Finance, he did nothing about clearing our debts. He did not do anything. I am not aware.”

Biti interjected:”Zimbabwe rejoined IMF.”

Ncube said another former Finance Minister Patrick Chinamasa tried to do something and then he was blocked.

“I am trying to do something. I think he should be more sympathetic. He had certain constraints which I am aware of which I will not say in this House but I am aware of them because I travel out there. I know what he was told out there because they tell me. The same people that he met, I also met them.

“So, we have a plan and if I can remind this House and him, we have agreed that Adesina (AfDB president) can be our champion and we are very pleased that he is a champion for arrears clearance. We held our first high level meeting on 1 December with IFIs, the preferred creditors as well as the Paris Club Partners to discuss our roadmap.

“We have also roped in the former President of Mozambique, Mr. Chissano to also help us deal with some of the governance reforms. President has been very transparent, he has been leading from the front on this issue and we have a plan and a document which I am happy to share with anyone. I will gladly give him a copy.”

Ncube shot down the suggestion by Biti that he should craft his budget in United States dollars.

“On the issue that I should present the budget in US$ – no, no, I chose to present it in ZW$ and that is fairly in order, given our currency regime,” Ncube said.

Ncube’s full response to Biti:

Hon. Biti, I have already tackled maybe one or two of your comments that 66% of the population is in the informal sector. As I said, the informal sector is a form of employment and it is not a bad thing. On the issue that I should present the budget in US$ – no, no, I chose to present it in ZW$ and that is fairly in order, given our currency regime.

On growth projections, he argued that the budget is about $4.5 trillion and the growth rate is 3.8%, so perhaps the numbers do not add up. These figures are always in nominal terms. We have not made an assumption about inflation. It is what it is. We are using year-on-year inflation. We will see month-on-month declining but year-on-year will still remain high. That is what we are picking here and it is fairly clear.

On disbursements to September, that the budget utilisation is not fast enough – as I said, it has got to do with the availability of cash and also the utilisation rate and absorption capacity of the ministries themselves. Some of them are absorbing their budget much faster like the Ministry of Agriculture, Ministry of Transport, Ministry of Defence, President’s Office – Ministry of Finance not quite. You will find that it is mainly the infrastructure ministries that are the fast burners of cash. The contractors are pushing that they want to get paid for their contract. So we understand and we have to pay them.

Hon. Biti then makes a comment about parallel budgeting and why we always come for condonation. Look, I have come to this House to seek condonation and that is how it works. That is not breaking the law. I have come to present supplementary budget and you have been so kind as an august House to allow me to have a supplementary budget. That again is within the law. That is how it works. So there is nothing wrong in coming to this august House to seek condonation. Nothing wrong in coming to this House to seek permission to have a supplementary budget and it is in order.

I think Hon. Biti went overboard on the IMF statement. Let me assist. I have it here with me and I approved it because they cannot release it without me approving it. When I read this, it is not as negative as Hon. Biti purports it to be. For what it is worth, let me just read one or two paragraphs. It says here, at the conclusion of the IMF, Mr. Ghura  who is  Mission-in-Chief issued the following statement, “ the Government provided a swift response to the COVID-19 pandemic supporting businesses, livelihoods and the health sector resulting in real output growth of 8.5% in 2021 under scoring the economy’s resilience, renewed domestic external shocks such as inflation surge, erratic rainfall, electricity shortages, Russia-Ukraine war are however adversely affecting economic and social conditions, real GDP growth is thus expected to decline to about 3.5% in 2022” That is their figure. Mine is 4%. 3.5% is still very good.

“These multiple shocks will continue to weigh on Zimbabwe’s growth prospects, currency and price pressures which emerged earlier this year largely owing to a spike broad money growth and the official exchange rate misaligned with market fundamentals and so forth”. The IMF Mission notes the authorities’ efforts to stabilise local exchange rate market and lower inflation. In this regard, the swift tightening monetary policy along with the greater official exchange rate flexibility – we moved to the willing-buyer willing-seller basis – and a prudent fiscal stance are policies in the right direction”. We are being commended. My learned friend, I am highlighting that he should not be selective. He should be balanced and the statement is very well balanced. It is quite positive and complimentary. While he raises issues one should always listen when colleagues raise issues. I think his projection of that statement was slightly selective.

On the issue of gold coins, someone said they should be banned, no I disagree. We should not ban gold coins. They have been very useful in mopping up liquidity and tighten monetary policy. It is a good thing. Hon. Biti makes a point that the IMF statement says we must live within our means, that is exactly what we are doing. We have been living within our means as far as budget is concerned. What happens from time to time when you have a surge in money supply, this is largely driven by the depreciation of exchange rate because some liabilities are in US$ and when you translate the impact of that depreciation, you have a surge in domestic liquidity and then it impacts the currency naturally. It is not that we have decided to increase budgetary expenditure, no. it is just the impact of currency depreciation at play.

Hon. Biti insinuated that we do not have a debt arrears clearance plan, we do. If I can challenge him – when he was Minister of Finance, he did nothing about clearing our debts. He did not do anything. I am not aware – [HON. BITI: Zimbabwe rejoined IMF]- Hon. Chinamasa tried to do something and then he was blocked. I am trying to do something. I think he should be more sympathetic. He had certain constraints which I am aware of which I will not say in this House but I am aware of them because I travel out there. I know what he was told out there because they tell me. The same people that he met, I also met them. So, we have a plan and if I can remind this House and him, we have agreed that Adesina can be our champion and we are very pleased that he is a champion for arrears clearance. We held our first high level meeting on 1 December with IFIs, the preferred creditors as well as the Paris Club Partners to discuss our roadmap. We have also roped in the former President of Mozambique, Mr. Chissano to also help us deal with some of the governance reforms. President has been very transparent, he has been leading from the front on this issue and we have a plan and a document which I am happy to share with anyone. I will gladly give him a copy.

Source: The InsiderZim




%d bloggers like this: