Murerwa Budget Dismissed As Unrealistic

Source from:  Zimbabwe Standard (Harare) December 4, 2005  12/05/2005

FINANCE Minister Herbert Murerwa's projections for 2006 are not attainable as economic fundamentals were pointing to a decline in economic growth, economic commentators said last week. Announcing the $123.9 trillion National Budget on Thursday, Murerwa was optimistic saying the economy would record a growth of between 2% and 3.5% in 2006 with agriculture the main driver. In his forecast Murerwa said agriculture was expected to register a growth of 14.8%. Murerwa said on Thursday: "This is on the back of a normal rainy season, increased hectarage under irrigation, timely provision of critical inputs and the introduction of the targeted production programme to promote food security. "Growth in the agricultural sector will be driven by the increased production of maize (+33%) and cotton (+26%)." Murerwa projected that annual inflation would decline to 80% in December 2006. Analysts cautioned last week saying the economic projections "lacked realism". "We will be fortunate if we do not have a negative growth," said Eric Bloch, a Bulawayo-based economic commentator. Bloch disputed the growth in agriculture saying tobacco output for 2005 was 30% less than last year. At a time when the country's seed maize producers were failing to meet the requirements, maize production would be severely hampered. The country requires 100 000 tonnes of seed maize annually while seed maize houses are producing a paltry 30 000 tonnes. On the growth in tourism, Bloch said the negative publicity the country had faced due to farm invasions and murders of white farmers would make it impossible for the country to register growth in tourism. Bloch said the economic fundamentals were pointing to a bigger budget deficit than Murerwa's forecast. Murerwa forecast a budget deficit of $13.9 trillion representing - 4% of Gross Domestic Product (GDP). Bloch said the proposed increase in the income tax-free threshold from $1.5 million to $7 million was a positive development meant to cushion workers. The Zimbabwe Congress of Trade Unions (ZCTU) also concurred with Bloch on the income tax-free threshold but said it has to be aligned to the Poverty Datum Line. "The ZCTU expected that the income tax-free threshold would be equated to the Poverty Datum Line which is $12.9 million as at November 2005," said Collen Gwiyo, ZCTU acting secretary general. Gwiyo said the political situation remained an impediment to any measures designed to arrest economic decline. "While relief measures in the budget are most welcome, it is clear that workers will not be able to fully enjoy them in full in the context of circumscribed civil liberties. Economic rights cannot be fully enjoyed without the corresponding human and trade union rights," he said. Enditem