Just going to give a quick breakdown of why I say this budget stinks. It’s the numbers. First half, revenue $4.99 billion, and expenditure $4.2 billion, giving a surplus of some $0.8 billion odd. Second half projection, revenue $9.11 billion and expenditure $14.42 billion giving a deficit of $5.31 billion.
Now two things wrong with that: first of course Mr Surplus plans to become Mr Deficit in the second half. We wonder why. But the scary thing is actually the fact that he projects expenditure to be up 243%, when we know that at best in real terms GDP growth is going to be flat, at best +2%. He also projects that his revenue will be up 82.6%
To put it simply, a 243% increase in nominal value of expenditure given a real growth rate of 2% simply means one thing: the monetary base is going to be inflated 243%. In other words, there is going to be printing. In reality, though, printing was already there, and that is why we have been experiencing the inflation – now turned hyper-inflation – that we have been going through. But now he is declaring and putting it out there in the open that he is going to print, and print at scale.
So the immediate thing you know is TSP is out the window, hyperinflation is here to stay, and the rate will at best be 1:30 at year-end, but more likely around the 1:50 level. I don’t have time right now to go through the detail, but that is the big picture of what that budget represents. As for the civil servants whose pocket is going from $4 billion to $5.6 billion (40% increase) all I can say is: “Mwari ngaave nemi!”
Accountant by training, Entrepreneur by experience and Christian by faith, Farai is passionate about SME development in particular, and national economic growth in general. He is currently involved in several ‘Doing Business’ reform processes, adjudicates several business awards and helps small and medium enterprises in Zimbabwe to grow their businesses.