EU To Discuss Zimbabwe Sanctions Before Next Feburary

UK Parly, House Of Commons Debate This Week

The Secretary of State was asked—
Mr. Henry Bellingham (North-West Norfolk) (Con): When she next expects to meet her European Union counterparts to discuss the effectiveness of current sanctions against Zimbabwe.

The Minister for Europe (Mr. Geoffrey Hoon): My right hon. Friend the Foreign Secretary discussed Zimbabwe with her EU counterparts in October. I have also had discussions on that country, including with my Portuguese counterpart. There will be further discussion of the EU’s targeted measures against Zimbabwe early next year, before their expiry in February. We believe that the measures, which target the regime members and not ordinary Zimbabweans, are effective and should be continued.

Mr. Bellingham: The Minister will be aware of the total collapse of Zimbabwe’s infrastructure and the rampant hyperinflation, with the cost of water in Harare last week increasing from 8 to 130 Zimbabwean dollars per unit. Is he also aware of the horrific human rights abuses, including the recent police attacks on the trade union vice-president Lucia Matibenga, which resulted in a broken arm? Surely the time has come for our Government and Europe to tighten smart sanctions and travel bans, which do not affect Zimbabwe’s hard-pressed citizens, but are aimed at Mugabe and his evil henchmen?

Mr. Hoon: May I make it clear that the UK condemns the most recent assaults on ordinary Zimbabweans? The organisation Women of Zimbabwe Arise shuns any form of violent demonstration and has a history of peaceful protest; there can be no excuse for the attacks that its members have suffered. The beating of women and children only two months after the abuse of the trade union leadership is further evidence of Zimbabwe’s terrible human rights record, which Robert Mugabe tries to argue is a figment of the west’s imagination.

I agree with the hon. Gentleman that it is vital that we continue to isolate the regime, but, as his opening observations made clear, we have no quarrel with the people of Zimbabwe and no reason to cause further harm to a population who are already suffering as a result of the appalling decisions of their leaders. That is why we draw the distinction between sanctions that are aimed at the regime and other measures that might further damage the people of Zimbabwe.

Mr. Brian Jenkins (Tamworth) (Lab): Although I welcome the talks on Zimbabwe with our EU partners, should not more effort be spent in talking to Zimbabwe’s neighbours, whose actions might have more effect, and to countries such as China, which continue to invest in Zimbabwe?

Mr. Hoon: I agree that all parts of the international community, and in particular Zimbabwe’s near neighbours, could do more. It is important to continue to isolate the regime, and it is vital to world opinion that the countries of southern Africa take united and effective action to isolate Zimbabwe. I strongly agree with my hon. Friend’s comments.

Dr. Julian Lewis (New Forest, East) (Con): Is it not a fact that there are no practical consequences that the Minister can name that have affected the leaders of Zimbabwe as a result of the sanctions? To follow up the suggestion made by the hon. Member for Tamworth (Mr. Jenkins), is it not necessary to do more and not only talk to Zimbabwe’s neighbours, but pin them down to practical measures that they can impose and we cannot?

Mr. Hoon: I have made it clear that we would like the international community, including Zimbabwe’s southern African neighbours, to do more, but I do not accept that there are no practical consequences. If that were so, the regime in Zimbabwe would not protest so loud and so long about the impact that the sanctions have. The fact is that its leaders do protest, which means that the sanctions are having some effect on them.

ZimJournalists Arise received a picture from our readers in London of the Free Zim Youth demonstration recently.The youths have adopted a militant stance against friends and sympathizers of the Mugabe regime, that visit England. Some of the activities the youth have undertaken are taking South African foreign minister Nkosazana Zuma, Mozambican President and London Zimbabwe ambassador to task.
ZimJournalists Arise welcomes picture of events, as we believe pictures tell the story better than words.

Zimbabwe Secret Agencies Confiscate Radios From Rural Folk

Information is being circulated that secret agents are confisticating rural people's radios. Now thats what we call TOTAL MADNESS AND DESPERATION to silence the media. Maybe jamming foreign based Zimbabwean radio stations is not working.

Disgusting!!!!

By Sekai Holland,
MDC Secretary For Policy And Research

News has just come in that Progressive Teachers Union of Zimbabwe (PTUZ)members, identified by rural communities in Gokwe District, the MidlandsNorth Province, as focal persons for their Radio Communication Project hadtheir radios seized by local CIO operatives. Raymond Majongwe is theSecretary General of PTUZ. When teachers explained that their radios weredistributed by their Union, they were asked to produce their Unionmembership cards. Having done so, CIO still took away the radios.

Radios were distributed to them last week. However news is that communitieswhose radios were removed are responding with displeasure.

The Radios are a popular phenomenon in rural life. They provide the latestnews, local and international and link up these isolated areas to oneanother, and with the rest of the world.

Mberengwa was the first district to raise an alarm this afternoon after theMataga CIO operating from Mataga Police station took away 2 radios, one from Thomas Shoko, last Saturday and the other from Mrs Sarudzai Dube, late lastnight.

The alert has been raised nationally that this is the latest CIO project.

Zimbabwe Jails Set To Fill As Government Threatens To Jail Schools Over Fee Hikes

By Sci-Tech News
The Zimbabwe government has capped fees for the country's private schools, threatening school heads with jail terms if they charge more than the gazetted prices as a battle for control over non-government schools intensifies, it was reported Tuesday.

School authorities say legal procedures have not been followed when setting the fees and are challenging the directive.

Education Minister Aeneas Chigwedere said the government had decided to set next term's new fees for Zimbabwe's 61 private schools to protect parents from exploitation, reports the state-controlled Herald newspaper.

Fees at many private schools in Zimbabwe have skyrocketed over the past few years as rampant inflation takes its toll. This has angered President Robert Mugabe's government, which has accused the schools of adopting elitist policies and trying to exclude pupils from poor families.

The new fees for day scholars at exclusive schools like St Georges College and Arundel Girls School in Harare have been set at just 153,000 Zimbabwe dollars per term - 612 US dollars at the official exchange rate but only 64 US at the widely-used parallel rate.

Boarding school fees have been set at 509,858 Zimbabwe dollars (2,039 US at the official rate, 212 US at the market rate), said the Herald.

UN Chief James Morris To Visit Zimbabwe

By World Food Program
ames T. Morris, the UN Secretary-General's Special Envoy for Humanitarian Needs in Southern Africa, will start his seventh and final trip to the region on Thursday (December 7) to urge governments and donors to take decisive actions to tackle long-term development problems.

During his eight-day mission, Morris plans to visit Zambia, Malawi, Zimbabwe and Mozambique as well as hold meetings with UN officials in South Africa. Morris, who is also the Executive Director of the World Food Programme, was appointed UN Special Envoy in July 2002. He will retire from WFP as well as the Special Envoy post early in the New Year.

Morris will hold a press briefing in Johannesburg on December 13 at 11.00 am at WFP's offices at Merafe House, 11 Naivasha Road, Sunninghill. Media interested in attending should bring accreditation and allow time for a rigorous security check upon arrival..

For one-on-one interviews, please contact Claudia Altorio on Tel: 011-517-1655 (office) or 082-908-1447 (cell)

Itinerary
Zambia: December 7-9
Malawi: December 9-10
Zimbabwe: December 10-11
Johannesburg: December 13 – Press Conference
Mozambique: December 14-15

For more information contact:
Mike Huggins (traveling with the S. Envoy) Tel: +27-11-517-1662 (office)
Tel: +27 82-908-1448 (cell)

South Africa Planning for 2010 Soccer World Cup Moves Into Top Gear

By Highway Africa News Agency
In anticipation of the 2010 and 2014 Soccer World Cups, the South African government has promised the Federation of International Football Associations (FIFA) a state-of the art technology and capital driven World Cup. Improvements that will make the World Cup a successful one include the availability of: -enough radio bandwidth frequency spectrum -improvement in access to broadcast coverage of rural areas -ensure excellent project management skills to manage complex and large productions -availability of adequate bandwidth for international demand on various platforms -upgrading of facilities and technology -funding implications -multiple language delivery -convergence and its implications for 2010

According to international football analysts the 2010 World Cup could be used to determine the readiness of the African continent to host international events of such magnitude, considering that it is the first time in the history of FIFA that the World Cup will be held on the African continent. Furthermore, the 2010 World Cup could be a marketing opportunity for the African continent to improve Africa 's image abroad.

Central to a successful world cup is the availability of satellite and fibre optic communications facilities for live broadcasts. The availability of broadband Internet facilities in and around FIFA's hotel facilities can break or boost Africa 's chances to host another world cup again. So that at stake is not the image of South Africa alone but that of the African continent and its peoples.

Meetings with FIFA's broadcasting team to determine what other role the SABC will play during the world cup are going on and training of SABC staffers in running a successful soccer event is also taking place.

However, the delivery of the SABC's HDTV infrastructure is still to be made, and the SABC is also engaged in assessing the involvement of other local and African broadcasters in the broadcasting of the 2010 Soccer World Cup.

Zim Youths Challenge Mozambican President In London

By Zim Youths Arise

Mozambican President, Armando Guebuza, faced tough questioning when he addressed an invited audience of African diplomats at London’s prestigious foreign policy institute, Chatham House, today Monday 4 December 2006.

As soon as he finished speaking, President Guebuza was grilled by black Zimbabwean human rights activists in the audience.

They were from the group Free Zim Youth and expressed their disquiet at the way Mozambique and other Southern African nations had failed to press President Robert Mugabe of Zimbabwe to ensure free and fair elections and respect for human rights.

They later ambushed the Zimbabwean Ambassador as he left Chatham House.

President Guebuza had spoken about how Mozambique was prioritising the fight against poverty. He stressed the importance of good governance.

Alois Mbawara of Free Zim Youth quizzed President Guebuza about Mozambique’s role in SADC (the Southern African Development Community), which is committed to uphold democracy and human rights.

“SADC has previously recognised that the crisis in Zimbabwe is a stumbling block to regional economic prosperity. But Mozambique has failed to uphold the SADC principles of good governance with regard to Zimbabwe,” said Mr Mbawara.

“SADC has promised to appoint a troika team to visit Zimbabwe, but has so far not done so. We want to know who is going, when they are going and what is their remit. Zimbabweans are dying while SADC dithers.

“I asked President Guebuza what is Mozambique’s policy to help solve the Zimbabwean economic and humanitarian disaster; citing the adverse impact on Mozambique of the influx of Zimbabwean refugees.

“The President was evasive. He said Mozambique was ready to play its part in resolving the Zimbabwean crisis, but failed to specify any concrete plan of action by Mozambique or SADC.

“Although President Guebuza was pressed three times to be specific about what SADC would do, he avoided giving any firm commitments. He gave us the brush off.

“Another Free Zim Youth campaigner, Luka Phiri, tried to get an answer from President Guebuza. He said Zimbabwe’s poverty was a world beater, with the lowest life expectancy and the highest inflation. But the President simply reiterated that Mozambique would do its best to assist Zimbabwe, without stating when and what this assistance might involve.

“Among the dignitaries who attended President Guebuza’s lecture was the Zimbabwean Ambassador, Gabriel Machinga. As he left Chatham House, he was ambushed by 10 members of Free Zim Youth.

“On the pavement outside, we surrounded Mr Machinga shouting: ‘Shame on you Machinga’ and held in front of his face a giant banner which read: ‘Mugabe wanted for murder.’

“Mozambique and other SADC countries have a duty to do something concrete to stop the killing in Zimbabwe. We expect support from our African neighbours, not neglect, indifference and evasion.

“During Ian Smith’s era of white minority rule, Mozambique played an important and valued role assisting the Zimbabwe freedom struggle. Now, once again, the people of Zimbabwe need our Mozambican brothers and sisters to help us free ourselves from Mugabe’s tyranny.

“We want a new Zimbabwe where there is democracy, social justice and human rights for all Zimbabweans – not a lawless state where Mugabe’s ZANU-PF cronies get rich and abuse their power at the expense of the people,” said Mr Mbawara.
Power To The People

Further information:

Alois Mbawara, Free Zim Youth: 07960 333 568

Luka Phiri, Free Zim Youth: 07951 293 766
Send instant messages to your online friends http://uk.messenger.yahoo.com

Awards For Excellence in Science and Technology Reporting

Region :Sub-Saharan Africa
Topic :Fellowships and Awards, Science

By I-JNET
All journalists and freelancers in Africa with relevant work published or broadcast between January 1 and December 8 are eligible to apply for the “2006 Siemens Profile Awards for Journalistic Excellence in the fields of Science and Technology”. Application deadline: December 8.
Siemens Southern Africa is sponsoring the awards, which aim to develop, nurture and advance quality science and technology reporting by encouraging journalists to explain complex issues to their target audience.
Journalists can submit their work to ten different categories including business solutions, communications, energy, industrial solutions in the manufacturing industry, medial solutions, research and development, technology policy and investment, transportation and corporate responsibility.
Submissions should display adequate research, a strong grasp of the subject matter, and a high level of analytical ability.
Prizes include cash and business equipment. The grand prize winner will also receive an all- expenses paid overseas trip. All prize nominees will be invited to an award ceremony in March.
For more information or to apply, email Program Administrator Kim Ferreira at kim@fcbredline.co.za, or visit http://www.profileawards.co.za/.

Canadian Journalists In Town

Report By Herald
A 10-member delegation of Canadian journalists and tour operators arrived in Zimbabwe for a weeklong tour of the country's resort and tourist centers, local media reported on Monday.
The visit, which is being coordinated by the Zimbabwe Tourism Authority in conjunction with the Zimbabwean Embassy in Canada, seeks to familiarize the Canadian media and tour operators with Zimbabwe's tourist destinations, The Herald said.
The tourism authority's Chief Executive Officer Karikoga Kaseke said the visit was part of his organisation's program, adding that the other purpose of the familiarization program was to instill confidence in the Canadian media crew and tour operators so that they could recognize Zimbabwe as a competitive holiday destination.
As part of the familiarization tour, the Canadian journalists and tour operators would visit Great Zimbabwe, the Antelope Park, Hwange, Matopos, Bulawayo and the Victoria Falls.
The visit followed the re-inclusion of Zimbabwe in the holiday packages by major tour operators in Canada who dropped Zimbabwe from their holiday packages five years ago following the negative publicity the country received from the west.
This year alone, a total of 70 groups visited the country on familiarization tours of which 26 were media houses and 44 tour operators.
Among the groups hosted by the ZTA this year were French opinion leaders, the Chinese BTV crew, Russian journalists and tour operators as well as many other tour operators from Britain.

Mutambara Gives Churches A Thumbs Down

After a lot of fanfare an publicity, Churches In Zimbabwe led by the likes of Bishop Trevor Manhanga seem not to be gaining any credibility. Zim Journalists is reliably informed that civic society met last week and gave the churches a thumbs down.Other critics of the document have been Archbishop Pius Ncube Here is a statement by rival MDC leader Arthur Mutambara on what he thinks of the contoversial doucment.

On the 28th of November 2006 the MDC leadership met with the Church leaders who are behind the “The Zimbabwe We Want” initiative. This was the first time that our party was engaged in this project. There had been misrepresentations in the press that the Church bishops had met some of our leaders before the launch of the document. This was completely false.

Zimbabwe is going through an economic and political crisis of unprecedented proportions. Any initiative that seeks to foster and develop solutions to this crisis must be supported. Whenever any group of Zimbabweans gets together in pursuit of such initiatives, it must be hailed and encouraged. The state of our country and pain of our people demand nothing less. Consequently, in spite of its initial exclusion from this particular Church initiative, the MDC is solidly supportive and wishes to be actively involved.

In pursuing a national initiative such as the “National Vision for Zimbabwe” it is essential to ensure ownership and buy-in by the generality of the people of Zimbabwe. The people must own both the process and content of the national vision. Furthermore, the process of an initiative cannot be de-linked from its content. A dysfunctional process will lead to distorted and contested content


Process of Achieving the National Vision

It is our submission that the Church leaders’ process in crafting a National Vision for Zimbabwe has been fundamentally flawed. It has been characterized by dishonesty, manipulation, and lack of inclusiveness. A few examples will suffice to illustrate these aspects. Critical stakeholders in the form of civic organizations, political parties, and church organizations (e.g., NCA, Crisis Coalition, MDC, ZCTU, ZINASU, Christian Alliance, National Pastors Conference) were not engaged nor consulted prior to the launch. To compound matters, there were falsehoods in the media, which were never retracted, about some of these groups being consulted. The lack of involvement of key players led to the spectacular failure of the document launch, where it ended being a ZANU(PF) orgy in self indulgency.

In addition, some of those organizations engaged were shown versions of the document that were different from what was eventually launched. This has led to complaints about duplicity and manipulation from the Catholic Jesuits, and Bishop Pius Ncube. The perception is that people and organizations were being used to legitimize a dubious agenda.

The most problematic process aspect of the Church initiative has been the way they have engaged Robert Mugabe and ZANU(PF). From the tea sessions at State House to the launch of the document by Robert Mugabe, the Church leaders have allowed the criminal dictatorship of Robert Mugabe to destroy the potential of the initiative. Mugabe’s ill-advised comments about non-negotiable issues, defence of the Lancaster House constitution, and general disdain for other stakeholders, have compromised the effectiveness of the initiative. In a very cynical way Mugabe embraced the project in order to destroy its credibility, and then unleashed his chief apologists and propagandists to viciously attack the initiative in the state media. What a shameful ploy!

The Church leaders are well-intentioned and their motivation is honourable. However, they have been extremely naïve. With the continuously deteriorating economic malaise and global isolation, Mugabe wants to buy time. He could use the initiative to do just that by appearing to be doing something. The suffering people of Zimbabwe will reject any process that will provide a lifeline to the evil regime of Robert Mugabe. They will not be part of any efforts to sanitize the
Dictator.

Content of the National Vision


The MDC will be submitting a detailed written response to the content of the vision document. Here we outline some preliminary and inconclusive remarks. The general gist of the document is in sync with the views of most Zimbabweans, that is, the material is common cause. However, there are areas characterized by omissions and distortions. Some of the distortions are due to the dysfunctional process through which the initiative has gone. The ugly hand of ZANU(PF) is evident. As already submitted, you cannot separate content from process.

For a start, the vision statement sounds like apple pie and motherhood. There is no economic vision, neither is there a social justice aspect to it. There is no clarity on the economic strategy that will take Zimbabwe from the economic crisis to the Promised Land. The recommendations on the economy are weak, poorly structured and lack congruency. Similarly, the section on land requires more input around collateral value of land, security of tenure, agricultural productivity, secondary agriculture, justice and equity.

A major distortion in the document is around the nature and cause of the Zimbabwean crisis. At the root of our national problems are issues of bad governance, political legitimacy, economic mismanagement, corruption, and political dictatorship, all due to the absolute failure of Robert Mugabe and ZANU(PF). This must be stated without equivocation or ambiguity. The vision document at best equivocates, at worst it is apologetic. Misdiagnosis of a problem will lead to wrong solutions.

It is also astounding that the language of the document is very subdued and apologetic when describing national institutional ills such as POSA and AIPPA. In some cases the diction resembles that of ZANU(PF) in the way issues like patriotism and sanctions are discussed. Presumably these language overtures are meant to placate the dictator, Robert Mugabe. It must be emphasized that this is done at a huge cost: De-legitimization of the content leading to its total rejection by the people of Zimbabwe.

Another area of contention in the document is on the subject of Gukurahundi, which is treated shamelessly as a footnote. There is a celebration of the first 15 years of independence as blissful and full of hope. Yet, it is during this period that the regime of Robert Mugabe massacred over 20 000 civilians in Matabeleland and Midlands. The nation must come to terms with this reality. There must be a Truth and Justice Commission, followed by an acknowledgement of what transpired. Only then can national healing begin. We must seek restorative justice, victim based justice, and rehabilitation of the communities affected. Today there are young people who cannot get birth certificates and identification cards because both parents were killed during Gukurahundi; and it is not officially acknowledged that the parents are dead. These are people being victimized today. Hence no! Gukurahundi cannot be a footnote in a National Vision for Zimbabwe.

A general point about the document is that it lacks time-frames, and prioritization of the different initiatives and recommendations. There must be clarity on what matters are short term, medium term and long term.

The document extensively uses Christian Biblical chapters and verses. This is inappropriate in a national vision document. Even if our country is 90% Christian we still have Moslems, Hindus, and Jews as part of our nation. There are also Zimbabweans who believe in traditional religions. We need religious tolerance in our national vision.

As indicated earlier, our detailed written response on the content is forthcoming.


The Way Forward

In conclusion it is clear that the Church leaders have process and content challenges in their great initiative. It is important that they embrace the critique we have provided above and address relevant matters. Dramatic changes and corrective measures are required, in particular around the process. The initiative has to be wrestled back from ZANU(PF), its credibility re-established, while building buy-in and confidence among disgruntled stakeholders. The success of the initiative will depend solely on the Church leaders doing the right things. As the MDC party, our reservations notwithstanding, we pledge to work closely with the Church leaders without any preconditions. We urge other stakeholders and the generality of the people of Zimbabwe to participate and seek to influence both the process and content of the initiative.

All Zimbabweans must own the National Vision for Zimbabwe.

Defeat is not on the agenda & Victory is certain.

The Struggle Continues Unabated.


Arthur G.O. Mutambara
MDC President

Green Bombers Earn More Money Than Zimbabwe Cops
By ZimOnline

Zimbabwe Police Commissioner Augustine Chihuri has warned that President Robert Mugabe’s government faced revolt by disgruntled junior security officers following the awarding by Harare of hefty salaries to youths from a controversial national service training programme.
In a confidential memo dated 22 November, a copy of which was seen by ZimOnline at the weekend, Chihuri said morale in the security services had hit rock bottom as the salary discrepancies had caused serious divisions between the security forces and the youths.

The five-page memo entitled "Salary discrepancies need urgent attention" was addressed to Home Affairs Minister Kembo Mohadi and State Security Minister Didymus Mutasa.
“The salaries they earn (national service youths) are more than 20 times what trained junior members of the uniformed forces who pay tax are being given per month and this has not only killed the morale of our members, but also made them more rebellious against the government.
“It is also worrying to note that these youths . . . earn more than three times a Senior Assistant Commissioner of the ZRP (Zimbabwe Republic Police)," reads part of the memo.
The youths, accused by human rights groups and the main opposition Movement for Democratic Change (MDC) party of unleashing terror on government opponents, are said to be earning untaxed monthly salaries of Z$600 000.

A junior officer in the army and police earns a basic monthly salary of Z$27 000, way below the food basket of over Z$104 000.
President Robert Mugabe’s government has since last November been deploying youths from the national service programme in cities and towns to monitor and enforce price controls on selected goods.

There have been reports that the youths had unleashed a reign of terror around the country as they beat up and harassed businessmen and informal traders whom they accused of inflating prices in a bid to sabotage the government.
In the hard-hitting memo which shows that all was not well in the security services, Chihuri warned that if the government failed to address the matter urgently, it could see the junior officers engage “in active rebellion against the government” which they already blame for triggering the economic crisis.

Zimbabwe is in its seventh year of a bitter economic recession that has spawned shortages of almost every basic commodity and the world's highest inflation rate of over 1 000 percent.
The police chief said Mohadi and Mutasa should warn Mugabe of the possibility of a “violent revolt” by junior officers who “feel abandoned.”
"Senior officers have benefited and continue to benefit . . . in various ways, but the juniors, who make up the bulk of the security forces and who are active on the ground are considering themselves as abandoned beings.

“They will not take time to revolt as they already suspect that the government does not trust them as much as it does the youths. It is your duty as ministers responsible for security to convince the President on the urgency of this matter.
“I hope you will play your part," says the memorandum.

Some junior members of the security forces who spoke to ZimOnline at the weekend confirmed that the salary discrepancies had caused a serious rift between security forces and the youths.
"We work harder than them (youths) but at the end of the day they earn more money than us. I tell you most junior members will be leaving in their droves next year because of this, " said a junior member of the army.

Contacted for comment yesterday, Mohadi confirmed receiving the memorandum but refused to divulge any information saying it was a “Top secret” document not meant for the Press.
"I cannot discuss the contents of such a document with the Press because it is a national security issue. All I can tell you is that the government knows that the security forces need a huge salary hike and they will get it in January," he said.
Mutasa could not be reached for comment on the matter

Statement On The 2007 Budget By The MDC led by Morgan Tsvangirai


Our crisis is bigger than a budget statement can resolve
The 2007 budget statement announced by Hebert Murerwa yesterday represents yet more evidence of the mediocrity, dishonesty and the bankruptcy of ideas of the Zanu PF regime.

More than that, it represents the paralysis in governance arising and connected to the succession issue in Zanu PF. Quite clearly, the decisive pronouncements and the proscribing by Murerwa against the RBZ governor's quasi-fiscal actions is a reflection of the intense civil war that is

taking place in the corridors of Zanu PF.

The economic crisis arresting Zimbabwe is structural and cannot be treated by cosmetic, populist, recycled and neo-liberal measures. We are a failed State, wherein 80 percent of the people are unemployed, real inflation is over 3 000 percent and where 80 percent of the population earn far below the bread-line salary of $180 000. We are a country bedevilled by the complete destruction of the supply side of the economy. For almost 10 years since 1997, the country has endured gross negative growth rates, a phenomenon unkown even in countries that have been at war.

Industry is operating at 25 percent of its normal productive capacity. And at the back of this, the country has seen unmitigated corruption and Zimbabwe has acquired for itself a shameful ranking of 157 out of 159 on the corruption ladder. The quality of life for ordinary Zimbabweans has deteriorated and life expectancy has dropped to 34 years. This is the state of the crisis and any honest budgetary approach should begin by recognising that the causes of the crisis are man-made and they are underpinned by a crisis of governance and a crisis of legitimacy. Blaming the crisis on non-existent sanctions or droughts reflects the perennial dishonesty that has become the national religion of this regime. It reflects a denial mode that results in the government's inability to craft proper and honest solutions to the problems bedevilling the nation.

The pumping of billions of dollars for inputs into the agricultural sector, which has been the norm of all budgets, has clearly failed to revive this critical sector and to restore us to our erstwhile status as the bread-basket of the region. Wrong people, namely Zanu PF chefs and other mobile phone farmers were allocated the land and what has happened is that a noble cause was bastardised by subjective execution.

Equally, the pumping of billions into mining, the creation of a mining fund and the proposed purchase of mining equipment will not resuscitate this sector. For starters, the reason why mining output is decreasing and why gold deliveries have declined is not because there is no production, but because of the massive leakages in the system. In any event, trying to revive an economy such as ours through agriculture and mining is a false premise. The Zanu PF vehicle of accumulation based on agriculture and mining for supply side recovery is a model that was true and correct in the 19th century. Raw materials without any value addition have never been vehicles for growth. It is manufacturing, industry and lately technology, managed in a local, inward-looking framework bereft of any neo-liberal blemish. That will be the starting point.

The model of the Asian tigers, the fantastic growth of China and India are not being spurred by agriculture or mining but by these alternative development paradigms.

The identity of inflation as the number one enemy in Zimbabwe is a reflection of a paralysis of analysis. Inflation is a macro-economic indicator of the relationship between the supply side and the demand side of the economy. It is a symptom of the sickness of the economy but is not the sickness itself. Thus it is important to identify the real causes of inflation. As popular local musician Oliver Mtukudzi would say, " Ongorora chikonzero chaita musoro uteme." Unfortunately, the budget does not take this into account.

The projected 2007 budget deficit as a percentage of Gross Domestic Product is 17 percent. This is a huge deficit considering that the regional average is 3 percent. This budget deficit, and more importantly the way it is financed, will create major inflationary pressures. We have seen in the past how Gono's quasi-fiscal experiments, equalling almost the official 2006 budget, created excess money supply of over 1 000 percent and resulted in a major inflationary push.

Moreover, to have budget in respect of which $1,4 trillion or 35 percent is going to be allocated to salaries alone, is a disaster. When one adds interest payments, it means that almost 80 percent of the budget is recurrent expenditure. Such a scenario is not only sad, but demands that Murerwa and his colleagues must resign. If almost 80 percent of the budget represents salaries and interests, then it means that the critical budgets to health, education and social services, have suffered. Indeed, Murerwa and his colleagues will go to town about the $1,3 trillion (30 percent of the budget) allocated to capital expenditure but what is not disclosed is that the bulk of that money is going to pay for penalties and punitive arrear interests on existing incomplete projects such as the Torkwe-Mukosi dam and the dualisation of the Harare-Bulawayo highway.

The raising of the tax-free threshold from $20 000 to $100 000 will be applauded as being positive. However, the reality is that the majority of the population do not even earn $50 000 per month and the bread-line salary is $180 000 while inflation realistically stands at about 3 000 percent. One cannot even buy anything meaningful with $100 000 in a supermarket.

Zanu PF being Zanu PF, one thing that concerns this regime is power and the desire to reproduce itself legally and extra-legally. No wonder the budget allocation to the army and the police in real terms has grown by more than 50 percent, with the army being allocated an embarassing figure of $225 billion for recurrent expenditure. This slush fund given to "the boys" is more than half the budget allocation to the Ministry of Health and Child Wefare. It's a shame!

One can go forever critiquing the sterile and recycled ideas from Minister Murerwa. The bottom line is that these people are now tired. as Franz Fanon said many years ago, exhausted nationalism is a danger to the national question in Africa. Zanu PF has clearly become a danger to the public good of the majority of Zimbabweans.



Zimbabweans are tired of high-sounding fiscal and monetary policy pronouncements that have failed to stimulate economic growth and to inspire investor confidence in an economy that has become a collective African shame.What Zimbabwe needs is a political solution to the national crisis. What Zimbabwe needs is a new government that has the support and the faith of the ordinary people who have borne the brunt of failed economic policies and a profligate government that continues to live outside its means.


Zimbabwe needs to embrace sweeping political reforms that include a new, people-driven Constitution, free and fair elections under international supervision, a reconstruction and stabilisation programme in a post-transitional era and a period of national healing. Nothing short of this political solution will save our country.
Hon Tendai Biti, MP
MDC Secretary General

Statement On The 2007 Budget By The MDC led by Arthur Mutambara

Whereas the Budget statements are meant to confirm and take forward the nation’s commitment to prioritise and protect those expenditures that can substantially contribute to economic growth, job creation, and overall poverty reduction, to also contain measures to improve pro-poor service delivery and strengthen public expenditure management, the hopelessness of Zimbabwe’s entire budget exercise and process, in this environment, is again exemplified by the Minister of Finance’s 2007 budget statement.

If the Minister cannot predict what will be the level of public expenditure next month, how then does he intend to predict a whole year expenditure pattern. The bids by the ministries make no sense whatsoever, with or without Gono’s quasi fiscal expenditure forays. So no matter what the Minister of Finance pronounces within the framework of the 2007 budget, by omission or commission his action will lead to more misery and further unprecedented economic decline. This will be the ninth successive decline in GDP since 1998. Is this what the Minister’s budget about, or he is just taking the people of Zimbabwe for a ride? If we judge by the way the economy will go, the Minister should concede that his budget is not a good omen, or else retract and go back to address the country’s fundamentals –stop corruption, restore rule of law and hence restore confidence of the investor in the economy - before presenting what the official press will obviously call a bold budget statement.

The only hint at reducing inflation worthy noting was rescuing away Gono’s appetite for quasi fiscal forays to come under Treasury, at an exorbitant cost of $1000 billion, to the tax payer. The nation is being told that this will bring inflation down to 350-400% by October 2007. But with all the economic fundamentals that brought about the high inflation in place, inflation is unlikely to come down. The allocations and estimates given by the Minister of Finance will continue to be eroded by the inflation pressures, mainly due to lack of production and continued growth of expenditure by this government’s bloated administration.

In the view of the MDC the fundamentals that require attention in order to halt the collapse of the Zimbabwe economy are the following:

Zimbabwe must stop denying the causes of the country’s economic problem and come to terms with itself - seek genuine dialogue with the people of this country.

Engage the people of Zimbabwe (the civil society, business, farmers, workers, churches) on fiscal policy, development of the economy and democratic rights of citizens.
Move away from the position of sustained macro-economic mismanagement and adopt a sound macroeconomic policies aimed at curbing inflation and laying the foundation for economic recovery.

Refrain from bad governance – asset stripping and corruption and looting of state owned enterprises and assets and engage the nation towards achieving of MDGs in order to reduce poverty.

Stop all forms of violent disruptions of the normal economic activities, lack of commitment to transparency, accountability, respect for human rights and democratic processes.

Any budget speech that ignores this framework continues to be self delusion and a joke for the people whose pain deepens especially immediately as a result of tinkering at the edges of a sick Zimbabwe economic body in national budget statements.

Priscilla Misihairabwi-Mushonga
Deputy Secretary General

Part 11 Of 2007 Budget
297. In this environment, it becomes necessary that Government prioritises the mobilisation of both public and private capital for national housing over the coming years in conjunction with other stakeholders, including the private sector. This will also move resources away from speculative ventures and direct investment into the real sector, thereby stimulating growth of the economy.

298. Consultations with the insurance and pension industry have identified the use of indexed financial instruments to allow pension funds to invest in prescribed assets that will facilitate investment into housing, affordable to workers.

299. I will expect our National Social Security Authority to play a significant role in the provision of affordable houses to the workers.

300. Mr Speaker Sir, in support of this innovative way to attract capital into the housing market and broaden access to property ownership, Government is reviewing the relevant legislative framework, in consultation with the Insurance and Pension Funds.

Social Protection

301. Mr Speaker Sir, stakeholder consultations also raised concern that the less vocal groups, who include the poorest, remain marginalised in the allocation of public resources, notwithstanding their level of vulnerability to the prevailing economic hardships.

302. Mr Speaker Sir, recent poverty assessments indicate increased levels of vulnerability in the country, especially among the marginalised groups who require both social protection and empowerment. In the case of children, it is estimated that there are over 1 500 000 orphaned and vulnerable children that are in need of protection.

Targeting Social Protection

303. The high incidences of poverty and vulnerability require that we strengthen and streamline our National Social Protection Safety Nets and Programmes. There is need to target the vulnerable groups, focussing transfers to the elderly, orphans, and the physically challenged. Public works programmes in both urban and rural areas will be targeted at the unemployed and able-bodied.

Social Welfare

304. Mr Speaker Sir, in order to cushion the elderly and physically challenged members of our society against rising inflation, I am proposing to review upwards the protection rates currently ranging between $60 and $250 per month.

305. I therefore propose in the 2007 Budget to increase the allocation to support Social Protection Programmes. This allocation also allows for the review of the current protection rates, ranging from $60 to $250 per month, taking account of the changes in inflation.

306. I further propose to allocate $18.7 billion towards the administration of social protection programmes, including provision of transport to facilitate mobility.

Basic Education Assistance Module

307. Mr Speaker Sir, over and above other social protection requirements, orphaned and vulnerable children of school-going age also require social protection through such programmes as the Basic Education Assistance Module (BEAM). I therefore propose to allocate $5.5 billion. for education assistance programmes.

308. It will also be critical that the Department of Social Services undertakes the necessary awareness campaigns of such protection programmes as BEAM, especially in rural areas.

People Living with HIV/AIDS

309. Mr Speaker Sir, the estimated over 600 000 people living with HIV/AIDS also face many challenges. These include financial difficulties to purchase anti-retro viral drugs (ARVs) which remain beyond the reach of many.

310. This is in spite of efforts to make them more affordable through support for local production initiatives by some of our pharmaceutical companies. Those able to access ARVs face the added challenge of sustaining the commensurate nutritional requirements.

311. Government has therefore, targeted resources under the 3% AIDS levy towards supporting our people living with HIV/AIDS under the coordination of the National AIDS Council.

312. I therefore propose to maintain the 3% AIDS levy in support of members of our society living with HIV/AIDS.

313. While concerns that a disproportionate share of these resources is being spent on administration, rather than supporting people living with HIV/AIDS, are being addressed by the Ministry of Health and Child Welfare, I propose that, with immediate effect, at least 70% of the collections under the AIDS Levy be earmarked for the purchase of Anti-retroviral drugs.

Public Works Programmes

314. Mr Speaker Sir, I have already made reference to the need to avoid direct cash transfer interventions, whether non-conditional or conditional, to those members of our society who remain able-bodied.

315. This stance by Government has seen us in the past support budget allocations for social protection in years of wider scale vulnerability, such as during a drought, through such public works programmes as ‘food or money for work’. Consistent with this, I propose to allocate $1.2 billion towards public works programmes during 2007.

Empowerment

316. Mr. Speaker Sir, in the prevailing environment of hyper-inflation and declining economic activity, the numbers of the unemployed groups continues to swell.

317. This, over and above social alleviation interventions, necessitates further Government support for income and employment generating programmes targeted at empowering the youth, women, and the poor, among others. These empowerment programmes should also mainstream disability, through support for the physically challenged.

318. The need to support empowerment programmes is also in recognition of communities as hubs of employment creation and income generation through various community based programmes and projects. Hence, these require continued support in line with the poverty reduction thrust of the Millennium Development Goals.

Youth Fund

319. Youths constitute 67% of our population, with around 400 000 leaving schools every year. The formal sector absorbs only 10% of these school leavers, resulting in a large number being unemployed.

320. Having realised the employment creation and income generating potential, Government through the Infrastructure Development Bank has set up a Youth Development Fund to avail capital to those projects that have been identified as highly productive.

321. I therefore propose to allocate $10 million as an additional capital injection into the Youth Development Fund administered by the Ministry of Youth Development and Employment Creation through the Infrastructure Development Bank.

Mainstreaming Disability in Budgeting

322. Mr Speaker Sir, I have already alluded to the need for an all embracive empowerment strategy, with programmes also targeted at the physically challenged members of our communities. This is in recognition of the fact that disability should never be viewed as inability, and hence the need for charity. This results in the marginalisation of the physically challenged.

323. Empowering the physically challenged remains a socio-economic development challenge in our economy. As such, our development programmes should mainstream disability, and also target at empowering this group.

324. I therefore propose to allocate $1.0 billion towards supporting income and employment generating projects of the physically challenged.

Small & Medium Enterprises

325. Mr Speaker Sir, the role of Small to Medium Enterprises (SMEs) in inculcating entrepreneurship skills, employment creation and poverty alleviation, as well as foreign currency generation, is recognised worldwide. SMEs have played a significant role in sustaining India’s high growth rates.

326. Supporting the development of SMEs is part of our economic development strategy. SMEs play a critical role in the beneficiation of local raw materials, and are an important tool for our empowerment and indigenisation programmes. They also play a significant role in ensuring the participation of women in the mainstream of our economy.

327. The graduation of many informal businesses into formal SMEs provides greater scope for access to formal banking lending programmes. In this regard, allow me to recognise the efforts of the Reserve Bank in coordinating the overall banking and financial sector to support initiatives targeted at the development of SMEs.

328. Already, many of our banking institutions have established dedicated units that offer financial support to SMEs. Financial support to SMEs is receiving a boost from resources being availed under the recently launched concessionary $16 billion Reserve Bank facility for on-lending by banks to SMEs.

329. Mr Speaker Sir, urban based SMEs have taken greater advantage of this financial sector support, necessitating Budget intervention largely targeted at the rural areas as well. Already, through the 2006 Budget, I provided $200 million in support of SMEs in rural areas through SEDCO under our Growth Points Resuscitation Programme (GPRP).

330. Mr Speaker Sir, notwithstanding that the Small Enterprise Development Corporation (SEDCO) was established by Government to spearhead the development of SMEs through provision of business loans and business development services, it has been failing to fulfil this mandate partly as a result of under-capitalisation.

331. While the corporation has supported some SMEs across all sectors of the economy in both rural and urban centres with 80% recovery rates, critical micro lending programmes have remained under-funded. I, therefore, propose to provide $54.3 billion towards the recapitalisation of SEDCO.

332. These resources will support the following programmes:

Table 2: SEDCO Support Facilities and Programmes
Programme/Facility Amount
Lending $40 billion
Business Infrastructure Development $8 billion
Capacity Building $0.8 million
Integrated Skills Outreach Programme $3 billion
Capital Expenditure $1.5 billion
Work Related Programme $1 billion

333. Successful utilisation of these resources through ventures in agro-based and other manufacturing activities should reduce the prevailing rural-urban migration pressure, as formal job market opportunities also arise at growth points and rural service centres. Surveys undertaken so far indicate successful inroads into milling, soap production, fence making, hardware supplies, furniture making and other activities.

334. Mr Speaker Sir, the provision of resources to rural based SMEs will contribute to increased economic activity in rural areas. This also enhances the scope for upgrading the existing infrastructure such as rural road networks, electricity, water, housing, schools and health care facilities.

Accountability over Public Resources

335. Mr Speaker Sir, limited Budget resources warrant strengthening systems of accountability over the efficient and effective use of public funds and property.

336. Honourable Members will be aware that Ministries and Departments, as well as our Local Authorities and Public Enterprises are often vocal in their references to inadequate provision and access to budgetary and other scarce public resources.

337. Mr Speaker Sir, we all aware that our economy is under siege. This calls for the efficient use of the scarce domestic and foreign resources. We also need to fully account for the use of these resources in a transparent manner and to avoid the abuse of such resources. This is critical to our economic survival as a Nation under sanctions.

338. Mr Speaker Sir, we cannot therefore continue operating in our ‘business as usual’ manner, tolerating wasteful use of resources, and imprudence in the utilisation of the scarce public resources. This, Honourable Members, can only worsen our economic situation and exacerbate inflation.

339. Dealing with inefficiencies in the utilisation of public resources and assets, requires the review of the financial management legal framework, and the introduction of penalties for non-compliance. I will, Mr Speaker Sir, therefore be proposing a new Public Finance Management Bill for the consideration of Honourable Members.

Public Finance Management

340. The proposed Public Finance Management legislation, once approved and assented to, will compel Ministries to take charge of their own accounts and produce their own reports, which would be tabled in Parliament. Furthermore, this will require them to produce financial reports for their respective Parastatals at the end of each financial period. This will improve accountability and enhance efficiency in the use of public resources.

Audit

341. It has also been observed that Government has not been producing audited financial statements, as line Ministries are failing to produce final accounts for the Comptroller & Auditor General's report.

342. I therefore also propose the introduction of the Audit Bill which seeks to improve accountability in the audit process, and eliminate the operational limitations inherent in the existing Audit & Exchequer Act.

Institutions of Government

343. Mr Speaker Sir, the successful formulation and implementation of Budget programmes critically depends on ensuring that Government institutions are operating efficiently and effectively.

344. The many instances where Memorandum of Understandings (M.O.Us) are entered into and concluded by Ministries in the absence of proper coordination and due regard to established institutional processes are not conducive to the effective operations of Government.

345. Mr Speaker Sir, such behaviour by line Ministries which do not fully comply and recognise established institutional processes will not be tolerated anymore.

Operations & Maintenance

346. Mr Speaker Sir, the 2007 Budget will also have to contend with the deteriorating public infrastructure, both in rural and urban areas. Major pressure areas relate to the rehabilitation of roads, bridges, dip tanks, schools, and health facilities, among others.

347. To sustain operations and maintenance requirements of Ministries and improve capacity to deliver essential services necessary for economic recovery, I propose to allocate a total amount of $736.5 billion for operations and maintenance.

Maintenance

348. Mr Speaker Sir, timely and adequate maintenance will be necessary if we are to benefit longer usage of the assets and infrastructure already acquired. To this end, there is need to ensure that funds are set aside for the maintenance of Government buildings, plant and equipment. I therefore propose the provision of $69.3 billion for this purpose. The Ministries of Local Government, Public Works and Urban Development and that of Rural Housing and Social Amenities are jointly driving the maintenance programme.

Grants and Transfers

349. I have made provision of $329 billion for employment costs with respect to Grant Aided Institutions in line with adjustments assumed across the Civil Service.

350. Furthermore, I have also made provision of $308 billion for operational expenses for these institutions.

Street Children Fund

351. Mr Speaker Sir, recognising the plight of children living on the streets, Government took the initiative to establish a Fund to act as a vehicle towards such children’s rehabilitation and development.

352. I am happy to advise Honourable Members that all the steps necessary for the setting up of the Fund have been fulfilled. To this end, I propose to set aside an amount of $1 billion as initial injection into the Fund. The Minister of Public Service, Labour and Social Welfare whose Ministry is charged with managing the Fund will lead further steps into the realisation of the objectives of the Fund.

Capital Budget

353. Mr Speaker Sir, stakeholders raised concern over the current structure of public expenditures, where infrastructure development is not sufficiently resourced to facilitate positive supply response. They cited the poor state of public infrastructure such as roads, incomplete dam projects, and other facilities.

354. Observations that the low Budget allocations for infrastructure projects have often been affected by the accommodation of previously unbudgeted recurrent expenditures were also made during these consultations. The little resources left for capital development are spread too thinly to make meaningful impact. This results in most Ministries being incapacitated to complete projects on time, undermining capital formation for economic growth and development.

355. This poses the challenge of increasing the capital budget and tightening controls on containing unplanned recurrent expenditure demands, some of which are not always related to emergencies and are often deferrable.

356. Mr Speaker Sir, in rationalising Ministries’ expenditure bids, I indicated my proposal to avail $1.5 trillion in support of the capital budget. This represents 24.4% of the overall expenditure level, in line with the Cabinet recommendation.

357. To avoid situations where allocations may not correspond to requirements to enable full project implementation, I have prioritised the completion of some on-going projects. This entails that some of the on-going projects will have to be postponed in order to redirect resources to those projects that are likely to be completed in 2007.

358. I have also availed $8 billion to the Infrastructure Development Bank as part of its capitalisation.

Road & Bridges Infrastructure

359. Mr Speaker Sir, Government shares in the concerns of our people over the poor state of our road infrastructure. The deterioration in the roads infrastructure to a state where most is in need of rehabilitation is explained by the limited availability of equipment and the critical human resource skills coupled with the high cost of construction.

360. The unit costs for road maintenance activities range from $2.255 million per kilometre to $10.249 million for periodic resealing maintenance. In the case of road construction to surfaced standard, we need $80 million per kilometre of road.

Road Maintenance & Rehabilitation

361. The funding requirement for our 2007 annual road maintenance programme is, therefore, estimated by the Zimbabwe National Road Administration (ZINARA) at $24.1 billion. Programmed works include resealing a total of 385 kilometres at a cost of $4 billion, re-gravelling 965 kilometres at a cost of $10.3 billion and 385 kilometres of pothole patching at a cost of $868 million. The balance of $8 billion and $1.1 billion relates to motorised grading routine maintenance, and grass cutting, respectively.

362. Honourable Members will be aware of the role of ZINARA in supporting the maintenance of both our trunk roads and recently, some of the major arteries into our towns and cities. ZINARA, which funds the Department of Roads, also finances roads for 59 Rural District Councils, 30 Urban Councils and the DDF network, thereby facilitating local authorities’ road maintenance programmes through financial support.

363. Mr Speaker Sir, local authorities have at times failed to expeditiously utilise ZINARA road maintenance resources on account of lack of capacity to prepare programme of works documents as well as failure to account for prior disbursements.

364. In doing all this, ZINARA is currently funded through the 5% fuel levy collected on the landed import price of fuel. This, however, is now inadequate to support the extensive road maintenance programme facing us both for the trunk roads and the major arteries into the urban centres.

365. Through the 2007 Budget, Government would want all roads authorities to register some tangible progress in rehabilitation and development of the roads infrastructure.

366. I propose to allocate $10 billion specifically targeted at pothole patching and resealing of some of the major roads in the residential areas of our cities and towns. This will also cover the main entry and exit access into our growth points.

367. With regards to the rural roads, I propose to allocate $4 billion through the District Development Fund.

368. These budgetary resources will compliment the contributions coming through ZINARA.

Rural Electrification

369. Mr Speaker Sir, Honourable Members are aware of Government’s establishment of the Rural Electrification Agency (REA) to spearhead rapid and equitable electrification of our rural areas through extending the electricity grid and promoting productive use of electricity in irrigation and cottage industries, thereby empowering rural communities.

370. While this was to be funded primarily through the 6% levy on all electricity consumers, the income from the levy has, however, remained inadequate for grid expansion. For 2007, the levy would raise only $13.9 billion, against a requirement of $128 billion to complete the targeted 1 000 projects. The overall backlog is 1 300 projects.

371. Furthermore, for the electricity end-use infrastructure development programme, four pilot schools milling projects carried out so far confirm that rural schools can engage in viable projects. Hence the Agency intends to develop 24 schools irrigation schemes and 58 schools milling projects at a cost $5 billion during 2007.

372. I propose to allocate $100.billion directly to village communities that want to take advantage of the electricity end-use infrastructure development by venturing into irrigation projects.

373. Given the huge resources required for the rural electrification programme and the projected deficit in domestic power generation, Government together with the private sector will vigorously promote the development of solar energy in the rural areas. The local manufacture of solar panels will be promoted through the provision of fiscal and monetary incentives.

Telecommunications

374. Mr Speaker Sir, increasing investment in mobile telecommunication across our urban, as well as expansion being made into our outlying rural areas, are enhancing access to communication and information throughout the country.

375. Further expansion in the next few years by the mobile networks should progressively raise the penetration rate of mobile phones to regional best practices of close to 50% of the population. New developments are set to see more base stations being put up, as the industry embraces the introduction of wireless and broadband internet access technology.

376. It is therefore critical that Government and cooperating partners support these expansion initiatives by the telecommunication industry, including the provision of foreign currency to import modern equipment and technology.

Water Projects

377. Mr Speaker Sir, notwithstanding the fact that in per capita terms, we are among those countries with the largest water bodies, there are still many areas where we need to construct more dams, especially in light of the challenges over irrigation.

378. In this regard, ZINWA has approved the construction of new dams in support of irrigation.

379. However, owing to resource and other capacity constraints, it remains necessary that we prioritise the completion of ongoing dam construction projects before undertaking new ones.

380. I therefore propose to allocate $127.1 billion for the following dams:

Public Private Partnerships

381. Mr Speaker Sir, Government cannot finance the maintenance and development of all public infrastructure from its own resources. There is therefore need to involve the private sector in the development of infrastructure.

382. Embracing broader stakeholder participation in infrastructure development projects requires the finalisation of the legal and institutional framework for Public Private Partnerships (PPPs), as well as incentives and special dispensations for the private sector.

383. Government has already put in place operational guidelines which are meant to promote and facilitate the implementation of PPPs in infrastructure development. While a number of projects are under consideration, the overall implementation progress has been slow owing to the absence of effective institutional and legal arrangements among other factors.

384. The finalisation of the institutional and legal arrangements will facilitate quicker approvals, effective co-ordination, implementation and monitoring of all PPPs.

Called Up Guaranteed Loans

385. Providing resources for non-performing called up guaranteed loans of Parastatals can only undermine the availability of resources for other critical budget requirements. With immediate effect, Parastatals will, therefore, be called upon to honour their loan obligations from their revenue.

2007 Budget Management

386. Mr Speaker Sir, the Budget Estimates I am presenting are fairly large. It is therefore critical that Accounting Officers exercise due diligence in the management of resources placed under their stewardship.

387. In order to ensure that execution of this Budget is in a manner consistent with revenue inflows, budget releases by Treasury will adhere to the available cashflows. Where accountability is not demonstrated, budget releases will be withheld.

388. In the case of funds budgeted for acquisition of furniture, vehicles and equipment, releases shall be subject to recording of assets under the Public Finance Management system and production of reports thereof.

389. Line Ministries will also be expected not to embark on any expansion, but limit spending levels within budget provisions.

Public Procurement

390. Timely completion of projects also requires tighter monitoring of programmes of Ministries in line with the principles of Results Based Budgeting. Delays in procurement and project implementation in an environment of high inflation ultimately leads to higher risks of increased costs and non-implementation.

391. Hence, ensuring that Government institutions are operating effectively, will require that we improve on the current delays related to our existing procurement systems and procedures.

392. In the interim, the tender value limits have been reviewed upwards as follows:

• For Competitive Quotations, from $1 million to $4 million;

• For Informal Tenders, from between $1 - $6 million to $4 - $20 million; and that

• Formal Tender procedures now only apply to all tenders above $20 million.

Domestic Debt Restructuring

393. The high budget deficits which have been financed mainly from domestic sources, have resulted in the accumulation of a huge and unsustainable public domestic debt overhang, which is currently close to $153 billion or about 15% of GDP.

394. Over 98.5% of this is in the form of very short term Treasury Bill borrowings of less than one year maturity.

395. Such a debt structure calls for the restructuring of domestic debt and the adoption of Budget financing strategies which limit the rapid expansion of the debt.

396. In this regard, a programme to restructure domestic public debt is being put in place in order to minimise the debt service burden on the fiscus. This includes the restructuring of debt with a view to transforming the bulk of existing debt into medium to long term tenors. A critical requirement for this restructuring process would be the introduction of adequate instruments with prescribed asset status.

397. This will allow players in the Insurance and Pension Fund industry to meaningfully contribute to the debt restructuring programme.

Savings & Investment

398. Savings are important for growth and prosperity because they provide a pool of investment capital for new and growing businesses. For the past six years, our savings and investment growth rates have remained below 10%. Such low levels cannot support the desired economic growth of between 5 – 7% consistent with the Millennium Development Goals.

399. Government has therefore prioritised the promotion of investment to sustain the above growth targets. However, the Zimbabwe Investment Centre and the Export Processing Zones Authority, which are mandated to promote investment are undergoing institutional re-organisation to enhance their capacity and focus.

400. Therefore the ongoing reforms that seek to amalgamate these institutions into a one stop centre, need to be buttressed together with a review of all inward investment approval procedures, so as to remove the administrative burden on applicants. The formation of the Zimbabwe Investment Authority will result in much more efficient approval processes and systems for inward investments.

401. Furthermore, in order to attract and give confidence to foreign investors, Government is fully committed to honouring all its international obligations under various protocols and international agreements including the Bilateral Investment Promotion & Protection Agreements (BIPPAs).



VIII. REVENUE PROPOSALS

402. Mr Speaker Sir, I have already made reference to the need for us to relate the 2007 Budget expenditure allocations that I have announced to the capacity of our economy to finance them. This, Mr Speaker Sir, makes resort to new tax measures unavoidable.

403. The reliance on revenue is also in recognition of the reality that we are on our own, as foreign financing inflows have largely dried up.

404. Consistent with these submissions, the thrust of my tax proposals, Mr Speaker Sir, are broadly focused on the following:

• targeting taxation at consumptive activities, rather than on production;
• supporting the productive and export sectors;
• enhancing disposable income in the hands of the taxpayer, thereby stimulating aggregate demand;
• sharing the tax burden by widening the tax base through presumptive tax targeted at those outside the tax net and tightening tax loopholes;
• rationalisation of VAT zero-rating and exemptions, in line with regional best practices; and
• relating the level of fees and charges to the cost of delivering public services.

405. Allow me, Mr Speaker Sir, to therefore submit the proposals for the consideration of the House. The formulation of some of these proposals has benefited from the valuable input of Honourable Members, as well as those of business, labour and ordinary citizens, during the pre-Budget consultations.

406. A major input that came out from the pre-Budget consultations across the country was the need for the Budget to take account of the effect of the prevailing high inflation on the real value of incomes. In line with this, I will be proposing some relief measures, taking account of bracket creep.

Tax Relief Measures

Income Tax

Pay As You Earn (PAYE)

407. Honourable Members will recall that during the Mid-Term Fiscal Review, the tax free threshold and tax bands were reviewed in July 2006 to cushion employees from the erosion of incomes arising from high inflation.

408. Mr Speaker Sir, inflation, has remained high, thereby, making further reviews from January 2007 necessary.

409. Government is aware of the growing salary gap between management and shop floor workers. The current tax structure is however not reflecting this income disparity where, low and high incomes of $54 000 and $600 000 per month respectively, are subject to the same marginal tax rate of 35%.

410. I therefore propose to raise the tax free threshold from $20,000 to $100 000 per month and spread the tax bands to end at $1 million above which income is taxed at a rate of 35%. Accelerated rates of tax will apply on incomes above $1 million.

411. These measures take effect from January 1, 2007.

412. I have already alluded to the need for me to report to Parliament on a quarterly basis the progress with the implementation of the 2007 Budget. This, Mr Speaker Sir, will present an opportunity for me to consider any necessary reviews to the tax free thresholds.

Bonus Payments and Performance Related Awards

413. Bonus payments and performance related awards to employees are a welcome source of additional income for taxpayers, especially during the festive season and end of year for parents’ preparations for the new school term requirements.

414. I therefore, propose to increase the tax free bonus from the current $20,000 to $100,000 with effect from November 1, 2006. This measure will release about $430 million to taxpayers.

Tax Credits

415. Mr Speaker Sir, tax credits reduce the tax liability of the elderly, blind and physically challenged members of our society, thereby assisting them to meet their special needs.

416. I, therefore, propose to increase tax credits for the elderly, blind and physically challenged from $1,000 to $10,000 per month, with effect from January 1, 2007.

Rental and Investment Income Earned By Elderly Taxpayers

417. Furthermore, in support of the welfare of elderly taxpayers’ dependent on rental and investment income, I propose to review upwards the exempt portion of such income from $12,000 to $112,000 per month.

418. Furthermore, I propose to widen the definition of investments, to include fixed term investments, in line with stakeholder submissions during the pre-Budget consultations.

419. These measures take effect from January 1, 2007.

Tax Free Pension Contribution

420. Mr. Speaker Sir, pension contributions have remained a major source of domestic savings, hence, the need for tax incentives in support of pension schemes. Central to this has been the tax free pension contribution threshold, currently at $6 000 per month.

421. In the prevailing high inflation environment, this threshold has lost value, especially for those contributing to both the compulsory NSSA scheme, as well as to private schemes, whose viability is now under serious threat.

422. I therefore propose to review the tax deductible limit on pension contributions from $6 000 to $75 000 to allow workers’ contributions to both the compulsory NSSA Scheme and the voluntary private pension schemes to benefit from this pension contribution tax deduction.

423. This is with effect from January 1, 2007.

Retrenchment/ Severance Packages

424. In order to support meaningful investment by retrenchees, it is important that in the prevailing high inflation environment our Budget tax measures target to maintain the real value of the non-taxable portion of retrenchment packages.

425. With effect from December 1, 2006, I propose to increase the non-taxable portion of retrenchment package from the greater of $1 million or one third of the retrenchment package, up to $1.5 million to the greater of $25 million or one third of the retrenchment package, up to $100 million.

Capital Allowances

426. Government efforts to assist companies engaged in expansion projects continue to be hampered by the continued erosion of capital allowances due to high inflation.

427. In this respect, I propose to increase the value of capital allowances with effect from 1 January 2007, as follows:

• passenger motor vehicles from $1 million to $10 million
• staff housing from $1,500,000 to $16 million

Donations to Schools, Hospitals & Clinics and Research and Development

428. Mr. Speaker Sir, Government is facing challenges in mobilising adequate resources to support health, education and research & development facilities. Individuals and private institutions are, therefore, encouraged to donate to schools, hospitals and research and development.

429. I, therefore, propose to increase allowable donations from $500 000 to $25 million with effect from January 1, 2007.

430. I further propose to increase allowable deductions for attending conventions or trade missions from $10 000 to $1 million with effect from January 1, 2007.

Corporate Tax Payment System

431. Mr Speaker Sir, Honourable Members will be aware that corporates are now taxed under the contemporaneous arrangement wherein we tax their profits in the year in which they are earned. Hence for 2007, the current legislation requires them to make quarterly payments of 10% in March, 40% in June, 40% in September and 10% in December on the year’s estimated profit, with a 10% margin of error allowed.

432. However, in the prevailing unstable macro-economic environment, many companies continue to face a volatile business production and trading environment.

433. I therefore propose to waive penalties under circumstances where corporates fail to forecast profits within 10% margin of error. Interest on outstanding tax payable will however remain payable. ZIMRA will also support companies in improving on their estimations of corporate profits.

434. Furthermore, in order to support improved cash flow positions of corporates, I propose to review quarterly corporate tax payments on taxable income for 2007 as follows:

Table 3: 2007 Quarterly Corporate Tax Payments
From To
March 25 2007 10% 10%
June 25 2007 40% 25%
September 25 2007 40% 30%
December 20 2007 10% 35%

Small Business Enterprises

435. Government recognizes the significant contribution of Small and Medium Scale Enterprises (SMEs) to the growth of the economy. The current tax regime does not however, grant any tax incentives specific to this category of entrepreneurs.

436. In order to support the initiatives of SMEs, I propose to grant special initial allowance of 150% on the cost of any plant and machinery acquired and brought into use for the first time in the business operations.

437. This measure takes effect from January 1, 2007.

Capital Gains Tax

438. Mr. Speaker Sir, capital gains tax applies on disposal of immovable property and marketable securities not registered on the stock exchange. Capital gains on sale of assets are ascertained after adjustment for an allowance for inflation. Other deductions such as cost of improving the property are also allowed in arriving at the taxable gain.

439. The inflation indexation allowance adjusts gains for the effects of inflation by giving an allowance equal to the amount by which the cost of the asset would have risen on a monthly basis if its value had kept pace with inflation, as measured by the increase in the consumer price index since the asset was acquired.

440. Currently, the inflation allowance is calculated using the annual average consumer price index for every year the asset is held.

441. I propose that the inflation allowance be calculated using the difference between the all items consumer price index (CPI) in the month of disposal and purchase, divided by the consumer price index for the month of purchase. The inflation allowance will similarly be calculated in respect of improvements.

442. This measure takes effect from January 1, 2007.

443. The proposed method of calculation is in line with international best practices.

Roll-Over Provisions

444. A taxpayer is allowed to rollover the proceeds of a principal private residence disposed in order to acquire another principal private residence. These provisions however, do not apply where a taxpayer disposes an undeveloped residential stand in order to acquire another stand.

445. In view of the hardships currently faced by taxpayers in developing residential stands, I propose to extend the roll-over provisions currently applied on principal private residence to residential stands with effect from January 1, 2007.

446. However, this measure will not apply to taxpayers who own residential properties and can benefit from roll-over provisions of such properties, on disposal.

Tax Reserve Certificates

447. Some taxpayers use Tax Reserve Certificates in order to settle their tax debts when they are due. Interest earned on Tax Reserve Certificates deposited with the Commissioner General is fixed and also exempt from withholding tax on interest. The current interest rate of 21.75%, which was put in place many years ago, hence has lagged behind the current market rates.

448. In order to enhance the attractiveness of the Tax Reserve Certificate as an advance tax payment instrument, I propose to review the current rate of interest from 21.7% to the average monthly Treasury Bill Rate with effect from January 1, 2007.

Value Added Tax

VAT on Agricultural Equipment

449. Mr. Speaker Sir, in order to support agricultural activities and boost productivity under the Land Reform Programme, Government extended VAT exemption to agricultural equipment.

450. However, stakeholders raised concern that the VAT exemption on agricultural equipment reduced the competitiveness of locally manufactured equipment. VAT input tax incurred on inputs into the production process can not be claimed if the finished product is exempt.

451. In order to level the playing field between locally manufactured and imported agricultural equipment, whilst providing the necessary support to the agricultural sector, I propose that exempted agricultural equipment be zero-rated for VAT purposes with effect from January 1, 2007.

VAT on Pipeline Transportation Service

452. Mr. Speaker Sir, importation of fuel by road transport is causing severe damage to the road network. There is therefore need for incentives to encourage use of the pipeline.

453. In order to encourage use of the pipeline, I propose to zero rate pipeline services with effect from January 1, 2007.

VAT Exemption on Pension Fund Administration Services

454. In recognition of the role of Pension Funds as a vehicle for mobilising savings, VAT does not arise on services offered by an actuary, insurance agent or insurance broker as defined in the Insurance Act, to the extent that those services are rendered to or on behalf of an insurer or a Pension Fund registered under the Pension and Provident Act.

455. Recent developments in the financial sector are such that the business of fund administrators is no longer restricted to institutions defined in the Insurance Act. Services offered by an independent Pension Fund administrator are however, not exempt from VAT.

456. I, therefore, propose to extend VAT exemption to services offered by independent Pension Fund administrators to the extent that those services are rendered to or on behalf of a Pension Fund registered under the Pension and Provident Funds Act.

Customs Duty

Customs Duty on Raw materials

457. Mr. Speaker Sir, Government’s thrust to enhance capacity utilisation of companies necessitates a reduction of costs which include duties on raw materials and capital equipment among others.

458. In this regard, I propose to provide relief to selected items of raw materials through duty reduction, with effect from January 1, 2007.

Ports of Entry Clearance of Goods

459. Mr Speaker Sir, traders raised concern over challenges of clearing their goods, especially during weekends, and after 1200 hours, when Real Time Gross Settlement (RTGS) transactions become unavailable.

460. Requests for alternative payment methods have therefore been submitted, notwithstanding the existence of pre-clearance facilities which allow goods to be cleared before they arrive at the port of entry.

461. The Reserve Bank is aware of these concerns and is monitoring the situation in conjunction with banking institutions, ZIMRA, and freight agencies.

Estate Duty

462. Currently, the principal residential property is exempt from estate duty. Furthermore, there is a tax free estate duty of $10 million above which a maximum duty of 5% is levied on any additional property.

463. I propose to raise the tax free threshold to $100 million.

Use of Technology in Tax Collection

464. Harmonisation of standards and regulations relating to trade and tax administration is central to achievement of regional integration. The SADC model Customs Act, when adopted will fully address harmonisation issues such as electronic submission of information to tax authorities.

465. Information processing using the traditional manual system is associated with delays, thereby impacting negatively on businesses operations and revenue collection.

466. In order to embrace technological advancements in line with international best practice, I propose that the relevant provisions of the revenue Acts administered by ZIMRA be amended to facilitate the application of information technology in areas such as the filing of returns electronically, registration of taxpayers and use of digital signatures among others.

Learning Material

467. Mr Speaker Sir, Government has always gone out of its way to support the development of human resources, both through direct budgetary allocation towards education and indirectly through provision of targeted tax relief measures.

468. Currently educational material is exempt from import duties as well as VAT. Furthermore, importation of school requisites is catered for through a duty free certificate issued by the Minister responsible for education.

469. Government remains committed to providing affordable education, and in this regard, stakeholders are thus invited to advise on cases where taxes are being paid on educational material.

Registrar for the Fiscal Appeal Court

470. Mr Speaker Sir, the current practice where a Legal practitioner employed by ZIMRA can be appointed as Registrar for the Fiscal Appeal Court presents potential for conflict of interest.

471. I therefore propose that legal practitioners employed by ZIMRA be relieved of the duty to act as Registrar of the Fiscal Appeal Court.

Housing Delivery

472. Consultations with the insurance and pension industry have identified the use of indexed financial instruments to allow pension funds to invest in prescribed assets that will facilitate investment into property, affordable to workers. Indexation to wages would allow workers to make repayments that rise in line with their incomes.

473. Mr Speaker Sir, in support of this innovative way to attract capital into the housing market and broaden access to property ownership Government is reviewing the relevant legislative framework, in consultation with the Insurance and Pension Funds. Some of the proposals made will incentivise investors, while protecting the interests of prospective home owners upon implementation.

Revenue Enhancing Measures

Withholding Taxes

Director’s Fees

474. Tax on fees payable to non-executive Directors is, in most cases, only remitted after assessment, resulting in loss of value due to deferment of the payment of tax.

475. I, therefore, propose to subject fees earned by non-executive Directors to withholding tax at a rate of 20%, with effect from January 1, 2007, in line with practice elsewhere in the SADC region.

Tenders, Consultancy and Other Services

476. The Income Tax Act provides for withholding tax of 10% on the value of tenders above $5 000 awarded through the State Procurement Board. The withholding tax is also levied on consultancy and other services offered to Government and quasi-Government institutions, and on trade of goods and services between registered and unregistered businesses.

477. I therefore propose to increase this amount to $500 000 with effect from January 1, 2007.

Remittances

478. The current legislation provides that withholding tax on interest, dividends, fees and royalties collected should be remitted to ZIMRA within a period of 30 days or such longer period as the Commissioner General may allow, taking account of the manual payment mechanism in place.

479. In view of improvements in payment transfer arrangements, I propose to reduce the period within which collected tax can be remitted to ZIMRA from 30 days to 15 days with effect from January 1, 2007.

Deemed Benefits

Motoring Benefits

480. Taxation principles of equity and fairness demands that equal income be taxed at the same rate. Motoring benefits that accrue to employees increase the gross income earned which should therefore be taxed in the hands of the beneficiary.

481. In line with this principle, I propose to adjust upwards the deemed motoring benefits with effect from January 1, 2007 as follows:

Table 4: Deemed Motoring Benefits
Engine Capacity Current Proposed
Up to 1500 cc $9 000 $100 000
Over 1500cc but not exceeding 2000cc $15 000 $160 000
Over 2000cc but not exceeding 3000cc $18 000 $200 000
Over 3000cc $24 000 $260 000

Corporates

Self Assessment

482. Honourable Members will recall that, during the 2006 Budget, I announced that, prior to implementation of self assessment system, ZIMRA will undertake a consultative exercise during the course of the 2006 fiscal year.

483. ZIMRA has since embarked on comprehensive stakeholder consultations, hence is ready to implement the self assessment system. This will place greater responsibility on taxpayers for assessing tax payable, thereby allowing revenue collectors more time to focus on auditing compliance standards of the major taxpayers.

484. I, therefore, propose to introduce the Self Assessment System on income earned from January 1, 2007.

Value Added Tax

Threshold for Registration

485. Honourable Members may recall that the VAT registration threshold was reviewed during the 2006 Budget to take account of the impact of inflation.

486. In order to enhance the administration of the tax, I propose to review upwards the threshold for VAT registration from the current level of $6 million to $60 million per annum, with effect from 1 January, 2007.

487. This measure will not apply to registered VAT operators.

Rationalisation of Zero Rated & Exempt List

488. Mr. Speaker Sir, SADC Member States agreed to rationalise and harmonize VAT zero-rated and exempt goods and services under the SADC Tax Memorandum of Understanding (MOU). In pursuance to this commitment, some Member States have reduced their list of zero-rated and exempt products to less than twenty items.

489. Although progress has been made towards rationalisation of exempt and zero-rated goods and services, our list however remains long, compared to other SADC Member States.

490. In this regard, I further propose to streamline the list of zero-rated and exempt goods and services to include lamb, goat and sea food with effect from January1, 2007.

Remittance Period

491. Under the current legislation, VAT collected should be remitted to ZIMRA by the last day of the first month following the end of the tax period relating to the registered operator.

492. In order to improve the accounting process of VAT collected, I propose to change the payment date for VAT remittances to the 20th of the first month after collection, with effect from January 1, 2007.

Auditing

493. Mr. Speaker Sir, I am aware of increased cases of non-compliance whereby some operators maintain parallel sets of trading books as they seek to evade payment by understating their tax obligations. This practice has potential to impact negatively on revenue collection.

494. ZIMRA will thus intensify audit coverage in order to reduce revenue leakage.

Value for Duty Purposes

495. Mr Speaker Sir, Government remains committed to fair competition with all potential trading partners. It is in line with this spirit that we have called on our industries to adapt to the more open globalised trading arrangements.

496. Concerns were, however, raised over the impact on local textile industry of dumping and unfair pricing. Stakeholders therefore called upon Government to levy protective customs duties.

497. In order to even the playing field between local manufacturers and importers, I propose to review the basis for determining the value for duty purposes. Announcement on the applicable rates will be made in due course.

498. Furthermore, I remain ready to invoke necessary measures to protect our local industries against any identified practices of dumping into the domestic market. I will also be capacitating quality control institutions such as the Standards Association of Zimbabwe.

Value Addition

499. Honourable Members will recall that in the 2006 National Budget Statement, I announced Governments intention to introduce tax measures that discourage the export of unprocessed commodities such as black granite with potential for value addition. A committee was subsequently put in place under the National Economic Development Priority Programme (NEDPP) to look into Import Substitution and Value Addition.

500. Sectors with potential for value addition have since been identified and appropriate support has partially been availed in line with commitments. Funding for either import substitution or value addition activities has been extended to companies in fertilizer manufacturing, oil pressing, pharmaceuticals, printing services, industrial valve manufacturing, tyre manufacturing, quarry blasting, copper and copper products manufacturing and chrome processing.

501. In order to discourage exports of raw or unprocessed products, I propose to introduce a levy on the value of selected unprocessed products, once measures to curtail obstacles that hinder the processing of value addition are implemented.

Other Revenue Measures

Customs Duty on Cigarettes and Tobacco Products

502. Mr. Speaker Sir, an influx of hazardous, inferior and under priced imported cigarettes continues to impact negatively on the competitiveness of locally manufactured products despite efforts to curb the importation of these products through imposition of deterrent customs duties. The duties have however not been effective due to the disparity between the rate of inflation and the static exchange rate.

503. In order to level the playing field between locally manufactured and imported cigarettes, I propose to amend the calculation of the specific component of customs duty on imported cigarettes. Customs duty on imported cigarettes will therefore be determined as follows:

• the greater of 60% plus US$5.00 per 1000 cigarettes, exchanged at prevailing inter-bank market rate, or 60% plus Z$3300 per 1000 cigarettes to be automatically adjusted monthly for inflation as determined by the Central statistics Office published Consumer Price Index for alcoholic beverages and tobacco.

NOCZIM Debt Redemption Levy

504. The NOCZIM debt redemption levy is currently pegged at $25 per litre of petrol and diesel. This has limited NOCZIM’s capacity to liquidate its debt obligations, which continue to rise in the prevailing interest rate environment.

505. I, therefore, propose to review the levy upwards to from $25 to $60 per litre, with effect from January1, 2007.

Carbon Tax

506. Fuel consumed by local motorists is subject to carbon tax at a rate of $5 per litre of petrol or diesel. In the case of foreign registered vehicles, the tax is charged in foreign currency according to engine capacity.

507. In order to relate the current rate of carbon tax to the market price of fuel, I propose to review upwards the current rate from to $5 to $100 per litre of both petrol and diesel, with effect from January 1, 2007.

Presumptive Tax

508. Mr Speaker Sir, the current levels of Presumptive Tax need to be aligned to reflect their real value, following erosion by inflation.

509. In order to realise this, as well as complement Government efforts in the maintenance of roads, I propose to review upwards the current rates of presumptive tax as follows:

Driving Schools

• Vehicles used for class four training – from $8,000 to $120,000 per quarter; and
• Vehicles used for classes 1 and 2 training – from $12,000 to $180,000 per quarter

Haulage Trucks

• Of carrying capacity of less than 20 tonnes – from $12,000 to $180,000 per quarter; and
• Of carrying capacity of more than 20 tonnes – from $20,000 to $300,000 per quarter.

Commuter Transport Operators

• Of carrying capacity of 15 to 24 passengers – from $6,000 to $90,000 per quarter;
• Of carrying capacity of 25 to 36 passengers – from $12,000 to $180,000 per quarter; and
• Of carrying capacity of 37 passengers and above – from $18,000 to $180,000.

Taxi-Cab Operators

• From $6,000 to $90,0000 per quarter

Automated Financial Transaction Tax

510. Automated financial tax is currently charged at the rate of $10 each transaction.

511. I propose to increase the rate to $50 per transaction, with effect from January1, 2007.

Stamp Duty

512. Stamp duty on cheques is pegged at $10 per each cheque issued.

513. I propose to increase stamp duty to $100 per cheque issued, with effect from January 1, 2007.


Budget Deficit & Financing

514. Mr Speaker Sir, the projected nominal GDP of $8.5 trillion for 2007, and the anticipated revenue target of 35.3% of GDP, would entail total 2007 Budget revenues of $3.0 trillion.

515. This level of revenue, against the above proposals to rationalise the 2007 Budget expenditure allocations to $4.6 trillion, excluding interest, would imply a Budget deficit of $1.5 trillion.

516. The resultant overall expenditures of $4.5 trillion, with revenues of $3.0 trillion, leave an overall Budget deficit for 2007 of 17.6% of estimated GDP.

517. Under this scenario, all effort will be made to contain non-interest expenditure within the expected revenue inflows of $3.0 trillion. Any borrowings will be channelled towards financing the interest on existing debt.

518. In light of the fact that the country will remain under sanctions, I have not made major assumptions with regards to foreign financing of this Budget deficit. The financing of the projected 2007 Budget deficit is, therefore, largely from domestic financial savings.

IX. CONCLUSION

519. The objectives of this Budget are to stabilise prices, grow the economy, create jobs and raise the standards of living of our people. In order to achieve these objectives, we need a Shared Vision and consensus on what policies are necessary to address these challenges. It goes without saying that we are going to need complementary policies that are well synchronised. And above all, we need the will and commitment to implement these tough policies.

520. When it is all said and done, Mr Speaker Sir, I believe the Zimbabwean economy is a resilient one, and it will carry us through. We may wish to get comfort from the words of Saint Paul in his letter to the Corinthians.

521. Mr Speaker Sir, 2 Corinthians Chapter 4 Verses 16 – 17, I quote: “Therefore, we do not lose heart. Though outwardly we are wasting away, yet inwardly we are being renewed day by day. For our light and momentary troubles are achieving for us an eternal glory that far outweighs them all.”

522. Mr Speaker Sir, I now commend the 2007 annual Budget to the House and I place it on the table.

Minister of Finance
HARARE
30 November 2006