Supplementary budget draws criticism

The Zimbabwe government's supplementary budget was unlikely to resuscitate the country's ailing economy, an analyst told IRIN on Monday. Economist Dennis Nikisi, director of the Graduate School of Management at the University of Zimbabwe, told IRIN that the Zim $700 billion (about US $850 million) supplementary budget introduced on Friday was "a self-serving budget - a damp squib which is not going to assist this economy". The supplementary budget pushed the government's total budget for the year to Zim $1.4 trillion. Nikisi questioned where the government intended to get the Zim $700 billion from, as the economy continues to contract and inflation is expected to hit 500 percent by the end of the year. "[Does it mean] we are actually going to create Zim $700 billion from nothing? All it indicates is that we are going to be printing more money, [but] where are we going to get that money when industry and agriculture are not generating anything at all? To make things worse, a very large portion of that budget is actually going towards recurrent expenditure - the increased wage bill for civil servants," he said. The local Zimbabwe Independent newspaper reported that Finance Minister Herbert Murerwa had told parliament on Friday that Zim $311 billion was needed "to meet additional costs of the job evaluation" of civil servants, which resulted in pay increases in July. Nikisi lamented that "nothing of significance is actually being directed towards the productive sector, [so] we should not expect any fundamental changes in terms of reinvigorating the economy". He noted that "the majority of our people are unemployed - between 70 and 80 percent". "Agriculture alone wants Zim $600 billion dollars, but they give it Zim $1 billion [in the supplementary budget]. To make matters worse for agriculture, they do not have equipment and inputs," Nikisi added. He pointed to recent reports that the soaring costs of agri-inputs were a major impediment to agricultural recovery in Zimbabwe. The official newspaper, The Herald, reported on Monday that "the price of fertiliser has shot up by varying ranges of up to 75 percent in a third round of price increases this year". The increases had dealt "a huge blow to farmers, who were battling against rising agri-input costs. The price of fertiliser went up in July by up to 100 percent following a substantial rise in the cost of raw materials", the newspaper said. Nikisi pointed out that supporting agricultural recovery was critical for an overall recovery in Zimbabwe's economy, adding that "in terms of [a recovery in the] industry, we have just given up".