Budget Statistical Inconsistencies Erode Investor Confidence
MUTARE– Zimbabwe Coalition for Debt and Development (ZIMCODD) blamed macro-inconsistencies emanating from the recently presented 2020 National budget for the country’s failure to attract investors who are losing confidence with each day passing.
By Donald Nyarota
Socio-EConomic Analyst with ZIMCODD< Tafadzwa Chikumbu, told delegates at a Public Finance Management Reform indaba, that such veils of secrecy are akin to policy inconsistencies.
Chikumbu argued that figures presented in the pre-budget statement, the budget statement and the blue book allocations are different which he said affect investor confidence who are forced to employ a “wait and see” attitude to establish whether the environment will be conducive to do business in the near future.
Furthermore, withholding inflation figures was not helping government’s cause as this erode public and investor confidence in government’s capacity to turn around economic fortunes of the country.
“The fact that the government presented different figures during budget presentation, this wears out the little confidence that potential investors might be having. This also leaves the general public with doubts on what will be actually happening. Why would they choose not to avail inflation figures, in what way is this going to help in turning around the fortunes of the nation,” queried Chikumbu
He added; “Government has produced varying figures in terms of the budget statement and real allocations this also takes away the little public trust that is there because we expected that particular budget to be consistent to build confidence within people.
“If the figures continue changing, maybe because of inflation, when growth rate projections change every time this really takes away the public trust let alone the foreign and domestic investors. So, investors will maintain the wait and see attitude to see where the economy is heading to and if indeed it is going to take shape,” said Chikumbu.
Pepukai Chivore, Deputy Director of Macroeconomic Policy in the Parliament budget office, said the budget failed to address the variance between the parallel market, used as a benchmark for pricing, and the official interbank rate.
Chivore said while government is adamant in suing the interbank rate goods and services are now indexed on the parallel market rate.
He said this will affect government ability to meet its targets in infrastructure as well as priority areas that have been allocated funds in the 2020 national budget.
“Government is the major consumer in the economy when they are buying they are consuming, when they are procuring they are buying on price indexed at the parallel market rate.
“However, government is insisting and very adamant that there is another rate called the interbank rate but in the interbank you go there to get foreign currency you don’t get it. So, in the mind of government we are budgeting using 1 as to 16 yet the actual prices are 1 as to 22, that disparity will lead to government failing to accomplish proposed interventions in infrastructure and items that are important,” said Chivore.
Government should make all efforts to ensure that what is said by the people is either implemented or there is a strong feedback mechanism to tell people why some of their views were not incorporated.
“Otherwise the whole essence of public consultations will lose relevance and credibility if what is said by the people is not eventually incorporated in the budget,” said Chivore.
He added, “We know that it’s not everything that can be taken on board considering that there were 366 submissions and only 89 were incorporated in the budget, but there should be deliberate efforts to communicate to the people why some of the issues were not taken on board.”