Zimbabwe’s finance minister proposed cutting taxes for the growing number of poor, increasing taxes on some manufacturers and cracking down on the black market as cures for his nation’s economic crisis.
Samuel Mumbengegwi’s budget speech on Thursday was televised — but unavailable to many here because of power failures. Opposition lawmakers jeered when Mumbengegwi said priority was to be given in 2008 to restoring electricity supplies and boosting the government’s near-dormant rural electrification programme.
Zimbabwe’s economic meltdown has seen official inflation reach 8 000%, chronic shortages of food, fuel and hard currency, and daily water and power failures as public utilities fail to replace aging equipment and pay for imported spare parts.
”The reality is that we are on our own and need to increase our self reliance,” Mumbengegwi said. ”That will entail endurance.”
The chief government statistician had said earlier this week that goods used in calculating average inflation were not available in stores across the country and so the figures, usually issued at the beginning of each month, would be delayed.
Mumbengegwi told lawmakers hyperinflation remained ”a major concern”. He said he aimed to bring inflation down to below 2 000% by the end of next year and predicted a reduction in the overall budget deficit 11% in 2008.
State spending in the first 10 months of this year exceeded 30% of its revenues, he said.
Mumbengegwi said the goods shortages were the result of declining production, Western economic sanctions and what he called ”speculative behaviour by businesses”.
He announced a crackdown on black market selling of scarce goods for up to 10 times the government’s fixed prices, favourable central bank loan facilities to manufacturers to boost production and export incentives.
Western nations have imposed travel restrictions on President Robert Mugabe and ruling party leaders but say foreign aid, loans and investment dried up of their own accord in seven years of political and economic turmoil in the aftermath of the often violent seizures of thousands of white-owned commercial farms that began in 2000.
The programme to hand over land to black Zimbabweans disrupted the agriculture-based economy in the former regional breadbasket.
Mumbengegwi said the nation was pinning its hopes on a revival of agriculture ahead of the harvests by April but would still have to import maize and wheat to cover any shortfalls in local production in 2008.
He said those earning less than Z$30-million a month ($20 at the dominant black market exchange rate) would be exempt from income tax from January 1. The previous line had been Z$4-million.
Mumbengegwi announcing increases of up to 50% percent in excise duty on local beer brands and cigarettes.
Much of downtown Harare, where Mumbengegwi delivered his budget in the Parliament house, was without electricity. Most cellphone and fixed line phone services also were out in the capital on Thursday.
A group of businessmen at a downtown social club hoping to watch the budget speech on state television instead listened to it on the radio in a car parked outside. – Sapa-AP