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Zimbabwe slashes budget by 10%

07-20-2012 02:44 BJT

Zimbabwe's national budget has been slashed by 10 percent in a mid-term budget review presented by the Finance Minister on Wednesday. In November last year Tendai Biti presented a 4 billion dollar budget which he has now downgraded to 3,6 billion. Zimbabwe has also moved to amend its controversial indigenization laws to attract more foreign investment.

Minister Biti described Zimbabwe's economy as being in a winter of despair set the tone for a presentation that painted a bleak outlook for Zimbabwe. Economic growth forecasts have been downgraded from 9,4 percent to 5,5%. Growth in key sectors of the economy is expected to slow with agriculture suffering the worst now expected to register minus 5,8% growth. Failure to meet revenue collection targets has been the source of the country's woes.

Tendai Biti, Minister of Finance, said, "Cumulative revenue shortfalls therefore stand at USD244 million by the end of June this is very significant…we might has well been asleep for a moth and switched off like we switch off TV's."

The national fiscus continues to bleed from excessive expenditure.

Tendai Biti, Minister of Finance, said, "Cumulative expenditure including the wage bill amounts to 1,5 billion…. We did not fund projects to the tune of 245 million be they education, SMEs or security agencies."

Revenue from diamonds, originally expected to generate 600 million, have only contributed a paltry 41 million. New control measures for the sector were introduced.

Tendai Biti, Minister of Finance, said, "Enactment of a diamond policy and enforcement of 100 percent ownership of diamonds…this country continues to be exploited."

The major theme of the minister presentation was the need for FDI as a panacea to the country's economic ills. Indigenization requirements deemed unattractive to foreign investors has been relaxed.

Tendai Biti, Minister of Finance, said, "We therefore propose that in respect of new FDI it will not have to comply with Sect 3 of the indigenization law i.e. 51 percent requirement. However investors will need to show their local empowerment plans be it a listing."

After a brief jump after the formation of the Government of National unity Zimbabwe's economy has reached a plateau with most indicators remaining stagnant over the last two years. The challenge is now to generate growth driven by new sources of income PTC The minister urged the need to get back to basics and swallow the medicine of austerity if Zimbabwe is to brighten its economic prospects in the second half of the year.

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Editor:James |Source: CNTV

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