HARARE – Opposition kingpin Tendai Biti has lashed Finance minister Mthuli Ncube for his “wrong economic prescriptions” for the country.
This comes after Ncube’s recent policy measures — which include the introduction of an unpopular two cents per dollar transaction tax — were roundly rejected by long-suffering Zimbabweans who accuse the new Treasury chief of plunging their lives further into poverty.
“The decision to impose that tax … and vary that tax from five cents a transaction to two cents in a dollar is a disaster, ill-thought, ill-informed and ill-founded and we are paying the price for it.
“The challenge in Zimbabwe is of course that of the budget deficit, but the deficit has been created not because we are collecting less revenue,” Biti told the Daily News in an exclusive interview yesterday.
“We are spending too much on the wage bill … 90 or 95 percent is spent on over 200 000 workers’ wages. And so we have to reduce the wage bill.
“When I was minister of Finance, I believed in a cash budget. You spend that which you have. I believed in fiscal consolidation … Eat what you kill.
“We managed because I was very clear and I would say no … (with regards to wasteful and ill-considered expenditure),” he said further.
President Emmerson Mnangagwa’s plans to revive the country’s battered economy received a severe jolt after Ncube’s belt-tightening measures — which were announced at the beginning of this month — failed to find resonance with ordinary people and business alike.
Ncube’s measures, which were announced on the same day that the Reserve Bank of Zimbabwe (RBZ) governor John Mangudya presented his post-election Monetary Policy Statement (MPS) — subsequently witnessed the crash of bond notes against the US dollar on the black market.
Since then, there has been widespread panic among consumers that things could deteriorate to the horrific lows of 2008 when hyper-inflation decimated the Zimbabwe dollar and emptied supermarkets.
Biti said Ncube wasn’t likely to succeed in pulling the economy out of the woods because he was focusing on “taxing people instead of cutting government’s wasteful spending”.
He said further that Ncube’s assurances that his measures would bring down the prices of basic consumer goods were futile as the country was “at the cusp of another economic hurricane”.
“The prices can’t go down because the cost of the US dollar can’t go down, and the US dollar cost can’t go down because we are not importing anything that will increase our supply, and we are not attracting any FDI (Foreign Direct Investment) or overseas development assistance,” he said.
Biti was credited with steadying the country’s economy which had tanked to historic levels due to hyperinflation in 2008, which forced both Zanu PF and the MDC to the negotiating table where an agreement was reached to form a government of national unity (GNU).
When he left the government in 2013, Treasury had $6,5 billion in its coffers, while the State’s domestic debt was a mere $275 million.
Today, the government has less than $200 million import cover and a gigantic $10 billion in domestic debt alone.
* Read Biti’s full interview in tomorrow’s Daily News On Sunday.