Sunday, October 21, 2018

No Going Back on Austerity Measures
Zimbabwe Sunday Mail

Finance and Economic Development Minister Professor Mthuli Ncube, who is 42 days into his new job, says it is only fair to judge him after six months, adding that he expects the benefits of austerity measures to start coming through around March 2019.

Economic structural reforms, he said, were unavoidable.

The Transitional Stabilisation Programme (TSP) through to December 2020 has secured the backing of the World Bank Group and IMF.

In an interview with The Sunday Mail last week, Prof Ncube said, “I have only been a minister for one month. We need patience, we know what we are doing. What I can say to Zimbabweans is that they should give me six months to see the full impact of the changes from the policies that we have pursued.

“Of course, I need a year to make a formal report with things such as the Budget, but judge me after six months. We would have made very good progress in various fronts, both in terms of arrears clearance agenda and progress on the fiscal front, dealing with the revenue front which we have acted on and cutting Government expenditure.”

He said the aftershocks of the new policy measures would not stop the stabilisation agenda.

“There is no regret. We are not going to do policy reversals, it’s a very bad idea to reverse policy. We need policy consistency. All we want is for Zimbabweans to understand what we are trying to do. We have a patient that is bleeding, these policies are the solution, they are not the problem,” he said.

“We will run some numbers on how we will do cost-cutting on a monthly basis. We will run some numbers on a monthly basis on the expenditure. This means after one year, I will be able to report formally on where we are. That is why I am saying, if you give me six months, you will see changes, significant changes.”

Treasury will cut the civil service wage bill, which stands at $300 million per month, by $60 million.

Added Prof Ncube: “I am confident that we will make a lot of progress, you will see the measures in our Budget, and (the) tentative date is 22 November.

“Government wages are about $300 million a month, so if we are reducing that from 70 to 50 percent (of expenditure), so we will save about $50 million to $60 million, which over time is what we would want to save on a monthly basis. This is the trajectory over the next three years.

“I can’t say whether (bonuses of civil servants) will be there or not, but it is an issue that we are looking at. We will consult with the President and other stakeholders, but in this Budget, we will show that we are serious about cutting expenditure.”

Prof Ncube said by broadening the tax base through the new two percent transactional tax and presenting a credible TSP, Government had completed part one one of the three-stage process of clearing arrears to international finance institutions.

“The plan basically has three stages: the first stage is to produce and present a credible reform programme, I have done that through the TSP.

“I have presented the document to the partners – IMF, World Bank and the African Development Bank, the IFIs, as well as the Paris Club. It was well received, almost without exception. They challenged me to walk the talk and ensure that the implementation happens. I then told them that implementation had already started through the tax.

“The second phase is we are desirous to make an offer to pay the AfDB. The pari passu rule says that we should pay them and WB at the same time, but we are pleased to realise that there has been an agreement to allow for some flexibility on that.

‘‘I am really confident that by next year we would have done that.

“The World Bank figure of $1,3 billion is large compared to the $680 million for AfDB, so for that one we will be seeking support from one or two countries, or even all the G7 nations. We need to do that and we are going to make a request.

“The AfDB amount is covered under what we call Pillar 2 resources. Of course, we have to top-up but that is manageable. The real issue is the World Bank portion.

“Then (stage) three is the Paris Club bilateral negotiation. Once we make an offer to clear off the AfDB arrears, we will then also kick-start the Paris Club negotiations and have conversations in a serious way.”

A meeting to that end has been scheduled for November 14 in Livingstone, Zambia; while Zimbabwe continues to engage the United States on economic sanctions.

The finance chief also said it was critical to have the right management at the Zimbabwe Revenue Authority and a new board would be appointed soon.

It has since emerged that Government is considering using some of the money raised from privatisation of State-owned enterprises to compensate pensioners who lost money during the hyperinflationary era.

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