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