Finance Minister presents tough budget

Zimbabwe’s new finance minister on Thursday presented a budget for 2001 which slashed government spending, cut taxes and acknowledged a debt crisis in a bid to reassure investors and donors abroad, agencies reported. Simba Makoni said the economy would shrink by 4.2 percent in 2000 and by 2.8 percent in 2001 after contracting by 1.2 percent in 1999. The budget deficit for 2000, forecast last year at 3.8 percent, would come in at around 23 percent of gross domestic product from a revised 9.8 percent in 1999, he said. “The high budget deficit we have contracted has compelled government to borrow excessively, placing the country in serious debt,” Makoni said.

Tackling a key element of state spending, he said the government would limit the government’s wage bill to 12 percent of GDP in 2001, down from an estimated 16.7 percent in 2000. He said the cabinet had approved a list of state assets to be sold or privatised and forecast that the project would earn at least US $610 million, which would be used mainly to pay external debt arrears and to retire domestic debt. Makoni said the defence allocation for 2001 would be down a third in anticipation of a peace settlement in the Democratic Republic of Congo, where Zimbabwe has been at war since 1998.