The minister indicated in his speech that the country would have to stand on its own in terms of sourcing critical credit lines. He all but appeared to have given up on his earlier attempts to implement cost-cutting reforms as a condition demanded by the international community for financial bail-out.
Speaking at a Zimra Taxpayer’s Appreciation Awards ceremony on Friday, Chinamasa said with little prospects of getting external support, the government now needed to seriously step up efforts to get money from the informal sector to fill in the gaps.
This comes amid reports that investors have adopted a wait and see attitude in the wake of worrying and unusual policy shifts from government — the latest being the trashing of Chinamasa’s proposal to cut the civil service wage bill. The Finance minister had proposed to cut the number of civil servants, their allowances as well as suspending bonuses for two years.
Within days of the announcement of these proposals, the minister had been shot down by a fellow Cabinet minister, who declared Chinamasa’s proposals had no Cabinet approval and were therefore null and void.
Chinamasa said the African Union had encouraged African economies to intensify domestic mobilisation efforts as development aid might be a thing of the past.
“What this means is that as individual countries, we can no longer rely on development assistance to support our budgets. In the case of Zimbabwe, we have not had any budgetary support from outside for a very long time,” he said.
“In truth, therefore, we are on our own. We now have to seriously look at domestic mobilisation as paramount to our economic development. Talking about domestic resource mobilisation, the issue that comes to my mind has been that of the structural shift that is taking place in Zimbabwe’s economy over the past 20 years.”
The structural shift Chinamasa was referring to was to do with the economy turning into an informal market, making it the main contributor to government revenue.
Economic experts and analysts said Chinamasa’s statement that the country was now on its own referred to the tripartite partners, namely, The World Bank, International Monetary Fund (IMF) and African Development Bank, which had promised to revive funding to Zimbabwe.
The government effectively disregarded the tripartite partners by not implementing conditions set by the three preferred lenders to cut the civil service wage bill that consumes over 97% of government revenue.
This has come as a potential capital injection of $5 billion, according to financial experts, was expected.
Economist John Robertson said the country had not done enough to demonstrate why it deserved help from the international community.
“How do proposals that are agreed upon with Cabinet later get reversed? We are on our own in respect of international bodies like the IMF and the World Bank, but we are receiving humanitarian aid. The minister is not admitting that we are receiving a charity as it would mean admitting to failure,” Robertson said.
However, contrary to Chinamasa’s statement, aid organisations have been keeping the country alive, with USAid being the biggest aid contributor, having spent $2,6 billion over a 36-year-period to date.
The second biggest donor is the United Kingdom’s Department for International Development aid organisation which has given hundreds of millions of dollars over the years.
The increasing headaches of his job seem to be weighing heavily on Chinamasa’s mind after he said he hardly slept owing to the downturn of the economy.
“I yearn for the day I can have a good night’s sleep. I can only have that good night’s sleep when our economy is performing, which is when all our economic players are generating sustainable business levels. I will also go to sleep when we are generating sufficient resources to support government programmes,” said Chinamasa.
Given Friday’s position put in the open by Chinamasa, Zimbabwe may be facing a real possibility of prolonged and deepening economic woes.