BILL WATCH 55-2015

BILL WATCH 55/2015

[20th November 2015]

2016 Budget Strategy Paper – Ministry of Finance and Economic Development

The Ministry of Finance and Economic Development’s 2016 Budget Strategy Paper, dated October 2015, has been released to the public, albeit belatedly.  It can be accessed on the Veritas website www.veritaszim.net or, for those without Internet access, requested from veritas@mango.zw, in which case we will email a soft copy to you as promptly as we can, allowing for the weekend.

Note:  The document Veritas can supply is authentic.  It has been supplied by the Ministry in response to our request.  Technical problems have apparently prevented/delayed the appearance of this paper on the Ministry of Finance and Economic Development website.  Veritas thanks the Ministry for its assistance.

About the Budget Strategy Paper [BSP]

Purpose of BSP

The Introduction to the BSP sets out its purpose, starting with the following:

“1. The 2016 Pre-Budget Strategy Paper (BSP) is meant to facilitate stakeholders’ participation and debate on budgetary and macro-economic policy issues for the forthcoming 2016 National Budget.

2.  The objective is to build consensus on specific issues to be addressed under the Budget. …

     …

7. I n facilitating the debate on the priority issues, the 2016 Pre-Budget Strategy Paper provides an overview of the economy and outlook projections up to 2018, reflecting the economy’s potential capacity as well as downside risks.”

Invitation for stakeholder inputs into Budget

The concluding paragraphs of the BSP invite stakeholders to make further relevant inputs, to enrich the 2016 National Budget, by—

direct submission to the Ministry at the New Government Office Complex between Samora Machel and Central Avenues, and Third and Fourth Streets

email

during public consultative meetings to be announced by the Ministry.

Comment:  This invitation is somewhat academic, given that the Budget presentation is on Thursday 26th November.

It is regrettable that the BSP has only become generally available so late.  It is said to have been available, but in soft copy only, to MPs attending the Pre-Budget Seminar at Victoria Falls 30th October to 3rd November – but even that was too late, if the purpose was to facilitate stakeholder/public participation in the budget formulation process.  Interested members of the public, for instance, would not have been able to lobby MPs ahead of the Seminar, in the hope of having an impact on Budget formulation

It has been suggested that the Budget formulation process should be regulated in more detail by Act of Parliament, as it is in other African countries where there is a statutory timetable allowing ampler time for stakeholders and the public to respond to and enrich the process.  That suggestion merits serious consideration.  The Public Finance Management Act would be a suitable home for statutory provisions of this sort.

Content of BSP

The 39-page document has several sections.  After the Introduction, come the following:

Domestic Macro-Economic Overview & Outlook

Overall GDP for 2016 is projected at 2.7% riding on the recovery of agriculture and mining as well as positive performance of the rest of the sectors.

On prices, it is said that the indications are that during 2016 inflation will remain subdued at an average of —1.2%.

Macroeconomic And Budget Framework 2012-2018

Anticipated revenues

Based on a 2.7% growth in 2016, total revenues of about US$3.85 billion are anticipated by the Ministry.  The assumptions underlying this are set out.  This figure represents the basic amount that the Estimates of Expenditure must divide between Parliament, the President’s Office, the various Ministries and the institutions [such as the independent constitutional commissions] that qualify for separate “votes” in the Estimates.

Priority Areas: 2016 And Beyond

Priority issues under the respective sectors are identified.  These include:

Agriculture and food security [priority issues: financing and inputs supply; climate change; productivity; marketing; livestock development]

Mining [priority issues include: roadmap on platinum processing; establishment of Special Economic Zones; amendments to Mines and Minerals Act; consolidation of the diamond sector; review of mining fiscal regime]

Manufacturing [priority issues: monitoring of customs duties on inputs into production and other trade measures; Special Economic Zones to attract investment; power generation; labour market flexibility; operationalization of National Competitiveness Commission]

Small & Medium Enterprises, Women and Youth Empowerment [priority issues include: review of co-operatives policy and legislation; entrepreneurship training]

Tourism, where moderate growth rates of above 4% are anticipated [priority issues: relaxing visa regime. Promotion of Open Skies Policy; and a Tourism Special Economic Zone]

Infrastructure and utilities [Power – Kariba South Extension; mini-hydro power stations; Independent Power Producers; infrastructure rehabilitation and upgrading; demand management measures – solar power, energy saving equipment and habits, etc.  Transport – joint ventures, PPPs and loan financing.  Communications – addressing shortfalls in internet penetration and broadcasting coverage]

Social Services and Public Enterprises  [it is acknowledged that “insignificant progress” in public enterprise reform makes such reform a priority for 2016]

Public Debt – Re-engagement and normalisation of relations with our external creditors will be a priority.  The current public debt is estimated to increase marginally in 2016 to $7.4 billion, of which $5.7 billion will be arrears.

Trade – exports and imports  With an adverse trade gap of $2.4 billion projected for 2016, management of imports and promotion of exports are stated as priorities.

Trade – Foreign Direct Investment [FDI]  [Priority issues: policy clarity and consistency; more attention to ease and cost of doing business and concluding outstanding BIPPAs – bilateral investment promotion and protection agreements]

Government finances  The section on Government finances mentions the need to strengthen revenue collection, plug revenue leakages, strengthen revenue administration and rationalise tax expenditure to meet the revenue target of $3.85 billion.  On expenditure, the emphasis is placed on corrective measures to ensure more efficient delivery of social protection and inclusion, health care services, and elimination of domestic payment arrears.

Comment:  Perhaps inevitably in a short document of this nature, there is not much about good governance, observance of the rule of law, protection of human rights, gender and child-sensitive budgeting and constitutional implementation, including effective operationalization of the independent  constitutional commissions.  Such issues are of great importance when it comes to attracting, local investment, foreign direct investment and development partner assistance.  We will have to wait until next Thursday to see whether the Budget Statement deals adequately with them.  For example, apart from the adequacy of funding, will all the constitutional commissions have their own separate votes, as the Constitution requires, in order to ensure they are not subject to undue influence from their respective Ministries?      

 

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