Former Minister of Finance Tendai Biti has reacted to the supplementary budget presented by Finance Minister Mthuli Ncube yesterday.
In his submission, Biti says:
The Minister of Finance has presented his 2022 mid term review & budget statement. It was painful to indulge in an hour of a pointless, tired monologue.
An absolute damp squib. A huge opportunity was missed to address fundamental disequilibrium in the economy centered around 7 key issues that are 1) hyperinflation 2) exchange rate collapse 3) collapse in public sector wages 4) collapse of the social sector 5) low out put 6) deficit financing & the national debt 7) tax reform. Sadly the gvt missed a glorious opportunity of addressing key issues.
Failing to address the key challenges of the day was a cowardly criminal omission that in any event has been the hallmark of Mthuli s tenure.
To compound matters Mthuli then proceeded to make shocking announcements on a supplementary budget & some tax increases .
The 2022 Budget was a ZWL$850 billion budget, but a ZWL$1.9 trillion budget is now being proposed .Effectively Mthuli is proposing a brand new 2022 budget 120% more than the original budget. This is sheer insanity driven by money creation & an overzealous fiscal policy.
They are failing to live within their means & are now resorting to money printing A fact confirmed by Mthuli s admission that broad money grew by 245 % by May 2022. That domestic debt is now ZWL$1.3 trillion is further proof of existence of a profligate irresponsible regime.
Collapsed public sector wages needed to be dealt with decisively & anything short of a US$ wage won’t work.
The proposed increase of the tax free threshold to ZWL$600 000 when the exchange rate is now above 1:1000 is an insult Perhaps most shocking are Mthuli’s tax measures which he was too embarrassed to read out.
The most cruel is the increase to 30% of withholding tax on cross border traders without a tax clearance certificate.
This will hurt 60 %of the population in the informal economy. The reduction of Value Added Tax threshold from US$60000 to US&40000 will also hit hard the informal sector.
Big business is not spared. Corporates are now required to prepare two sets of accounts, one for US$ and another for ZWL$ transactions. This a costly exercise confirming that we have become a Banana Republic.
In short this Review was a complete disaster. It betrayed the absence of a theoretical philosophical framework of its authors.
It entrenched looting and arbitrage whilst unleashing cruel revenue measures. What a dog s breakfast!
Zwnews
