eBusiness Weekly
Taking Stock Kudzanai Sharara
Finance and Economic Development Minister Mthuli Ncube’s Transitional Stabilisation Programme is appropriate since it speaks to key areas that have brought the country to an unsustainable position.
The country’s situation worsened, in the last few days with parallel market rates and prices of both goods and services spiking amid serious shortages.
Some shops have since closed while others removed goods from shelves amid fear of making huge losses.
But the biggest problems that caused all this and require urgent and comprehensive solutions, include but are not limited to a ballooning budget deficit, a trade deficit and an untenable unavailability of foreign currency.
Government through the Ministry of Finance and Economic Development and the Reserve Bank of Zimbabwe, have in the past two weeks announced new monetary and fiscal measures that are meant to address the imbalances that exist in the economy.
The RBZ’s Monetary Policy Statement speaks of fine-tuning the financial system in order to achieve the Bank’s mandate of maintaining price and financial stability, which is the bedrock for economic development. This is a departure from the past, where the central bank would engage in issues and interventions that are best left to fiscal authorities.
The fiscal measures that were announced by Minister Ncube, correctly identified risks that threaten the signs of recovery and growth, that have been witnesses in the economy of late.
In other words, the Government is no longer hiding by the finger and has come in the open and has recognised the risks brought about by the high level of deficit and domestic market financing.
To this, Minister Ncube proffered austerity measures aimed at addressing fiscal and debt challenges for sustained macro-economic stability and growth. Some of the measures include, reducing the consolidated Public Service Wage Bill, to 50 percent in by 2020 from 68,9 percent of fiscal revenues in 2017.
By the dollars, these measures are expected to reduce the annual Wage Bill outlay by around $200 million (0,7 percent of GDP) and $130 million (0,4 percent of GDP), respectively.
This among many other measures is expected to create additional fiscal space to accommodate financing of the development.
Budget, as well as improve the coverage and quality of key social services.
While these measures points to the direction that the country might want to take, not much will be achieved if there is no buy in from all stakeholders.
Such radical economic measures are best done through a social contract, where the give and take concept is adopted.
Problems will arise not because people don’t support the policies, but because they don’t understand the processes because very few have experienced leadership transition.
Proper communication of policies is key, ambiguous and hardly explained policies risk being interpreted the wrong way resulting in rejection even when they are well-meaning.
Right now, people are reacting based on the experience that they know and because they are not informed sufficiently of the process that the policymakers will be taking to achieve their goals.
If we are to get it right, and get the buy in of everyone, there is need for a global view of the major policies being taken and the intended goals they are meant to achieve.
