You are here:Home>National Assembly Hansard>Vol. 35>NATIONAL ASSEMBLY HANSARD - 18 MARCH 2009 VOL. 35 NO. 23

NATIONAL ASSEMBLY HANSARD - 18 MARCH 2009 VOL. 35 NO. 23

PARLIAMENT OF ZIMBABWE

Wednesday, 18th March, 2009

The House of Assembly met at a Quarter-past Two O'clock p.m.

PRAYERS

(MR. SPEAKER in the Chair)

ANNOUNCEMENT BY THE SPEAKER

APPOINTMENT TO THE STANDING RULES AND ORDERS COMMITTEE

MR. SPEAKER: In terms of Section 20 (1) (10) paragraph 2 (1) of the Constitution of Zimbabwe Amendment No. 19 Act, the Standing Rules and Orders Committee shall consist of:

a) The Speaker

b) The President of the Senate

c) The Deputy Speaker

d) The Deputy President of the Senate

e) The two Vice Presidents

f) The Prime Minister

g) The Minister of Constitutional and Parliamentary Affairs

h) The Minister of Finance

i) The Whips of political parties that signed the inter-party agreement.

j) The Deputy leader of government in the House of Assembly

k) The Deputy leader of government business in the Senate

l) Eight members elected by the House of Assembly and four members elected by the Senate based on the Political and Gender composition of the relevant House.

In pursuance of the same, the political parties have nominated the following:

MDC (M)

Hon. Prof. A.G.O. Mutambara and Hon. Prof. W. Ncube

Hon. J. Mguni and a member to be appointed from the Senate.

MDC (T)

Hon. T. Khumalo, Hon. T. Mathuthu, Hon. T. Mashakada and Hon. Sen. O. Gutu.

ZANU PF: Hon. E.D. Mnangagwa; Hon. P.M. Mangwana; Hon. P. Chinomona and Hon. Sen. P.A Chinamasa.

CHIEFS COUNCIL: Hon. Sen. Chief F. Z. Charumbira

The Speaker of the House of Assembly and the President of the Senate are Chairperson and Vice Chairperson respectively.

The nominations comply with the requirements of numbers set in the constitution and the gender and political composition of the Houses. I, therefore, declare the members nominated to have been duly elected to the Standing Rules and Orders Committee.

NOMINATION TO THE PAN AFRICAN PARLIAMENT

MR. SPEAKER: In terms of the protocol to the treaty establishing the African economic community relating to the Pan-African Parliament, article 4, sub-paragraph 2 states that each member state shall be represented in the Pan-African Parliament by five (5) members, at least one of whom must be a woman.

Sub-paragraph (3) of the same article states that the representation of each member state must reflect the diversity of political opinions in each national parliament or other deliberative organ.

Article (5) sub-paragraph 1 also states that the Pan-African Parliamentarians shall be elected or designated by the respective national parliaments or any other deliberative organs of the member sates, from among their members. I have received one nomination, Hon. E. Matamisa to replace Hon. P. Mpariwa who is now a Minister. The nomination meets the requirements of article 4 sub-paragraph 2 of the treaty establishing the Pan-African Parliament. Therefore, I declare that Hon. Matamisa duly elected to represent Zimbabwe at the Pan-African Parliament.

INFORMATION COMMUNICATION

TECHNOLOGY WORKSHOP

MR. SPEAKER: I also have to inform the House that the Information Communication Technology workshop organized by the SADC Parliamentary Forum will be conducted for women parliamentarians from 24 -27 March 2009 in the Government Caucus Room from 9:00 a.m. each day. Teas and lunches will be provided. All women parliamentarians are urged to attend.

MOTION

LEAVE TO SUSPEND STANDING ORDER NO. 22, 33, 34, 104, 105, 106 and 109

THE DEPUTY PRIME MINISTER (MS. KHUPE): I seek leave of the House that the provisions of the following Standing Orders in respect of the Finance Bill H.B 3and the Appropriation Bill regarding the automatic adjournment at Twenty Five Minutes past One o'clock on Friday. Standing Order No. 33 regarding the precedence of private members business on Wednesdays. Standing Order No. 34 regarding the taking of questions for oral answers at the commencement of business on Wednesdays. Standing Order No. 104 regarding the publication of Bills in the Government Gazette and Notice of Presentation of Bills. Standing Order No. 105 regarding the Referral of Bills to Portfolio Committees; Standing Order No. 106 (3) relating to Reports from the Parliamentary Legal Committee and Standing Order No. 109 relating to Stages of Bills.

Motion put and agreed to.

MOTION

SUSPENSION OF STANDING ORDERS NOS. 22, 33, 34, 104, 105, 106 AND 109

THE DEPUTY PRIME MINISTER (MS. KHUPE): Mr. Speaker Sir, I move that provisions of the following Standing Orders be suspended in respect of the Finance Bill [H.B. 3, 2009] and The Appropriation (2009) Bill [H.B. 4, 2009]. Standing Order No. 22 regarding the Automatic Adjournment of the House at Five Minutes to Seven o'clock p.m. and at Twenty Five Minutes past One o'clock p.m. on Friday; Standing Order No. 33 regarding the precedence of private members business on Wednesdays; Standing Order No. 34 regarding the taking of questions for oral answers at the commencement of business on Wednesdays; Standing No. 104 regarding the publication of Bills in the Government Gazette and Notice of Presentation of Bills. Standing Order No. 105 regarding the referral of Bills to Portfolio Committees. Standing Order No. 106 (3) relating to Reports from the Parliamentary Legal Committee and Standing Order No. 109 relating to Stages of Bills.

Motion put and agreed to.

MOTION

WITHDRAWAL OF DRAFT FINANCE BILL

THE MINISTER OF FINANCE: Mr. Speaker Sir, on Thursday 29 January 2009, the Acting Minister of Finance moved a motion that leave be granted to bring in a Finance Bill and made a statement detailing measures to raise funds to make further provisions for the revenues and public funds of Zimbabwe and tabled the Draft Finance Bill and Main Estimates of Expenditure for the year ending December 31, 2009. I therefore seek leave of the House to withdraw the statement by the Acting Minister of Finance on Thursday 29th January 2009 detailing measures to raise funds to make further provisions for the revenues and public funds of Zimbabwe. The draft Finance Bill in terms of Standing Order No. 119, which provides that a Bill may be withdrawn at any stage, and Main Estimates of Expenditure for the year ending December 31, 2009 and at same time present a revised budget statement detailing measures to raise funds to make further provisions for the revenues and public funds of Zimbabwe, table a revised Finance Bill and the revised main estimates of expenditure for the year ending 31 December 2009.

I now move that the Draft Finance Bill be withdrawn in terms of Standing Order No. 119 which provides that a Bill may be withdrawn at any stage and the Main Estimates of Expenditure for the year ending 31 December 2009 be withdrawn and at the same time present a revised Budget Statement detailing measures to raise funds to make further provisions for the revenues and public funds of Zimbabwe, table a revised Finance Bill and a revised Main Estimates of Expenditure for the year ending 31 December 2009.

Motion put and agreed to.

Draft Finance Bill and revised Main Estimates of Expenditure for the year ending 31 December 2009: With leave, withdrawn.

MOTION

BUSINESS OF THE HOUSE

THE DEPUTY PRIME MINISTER (MS. KHUPE): I move that Orders of the Day, Numbers 1 to 5 be stood over until Order of the Day, No. 6 has been disposed of.

Motion put and agreed to.

MOTION

FINANCE BILL: 2009 BUDGET REVIEW STATEMENT

THE MINISTER OF FINANCE:

INTRODUCTION

 

1.1.1. Mr Speaker Sir, Honourable Members will recall that on 29 January 2009, the Honourable Acting Minister of Finance presented the 2009 Budget in this August House.

1.1.2. Debate on the Budget forms part of this Session and I have the honour to open this debate.

1.1.3. In order to facilitate this debate, I have synchronised the 2009 Budget to recent political and economic developments, which culminated in the formation of the Inclusive Government which in turn initiated the formulation of the Short Term Emergency Recovery Programme (STERP).

1.1.4. Mr Speaker Sir, at the epicentre of these socio-economic challenges, have been unprecedented levels of hyper-inflation and declining productive capacity and hence massive de-industrialisation, food shortages, loss in value of the local currency, corruption, deteriorating public service delivery particularly education, health, sanitation as well as public utilities and infrastructure.

1.1.5. The impact of all the above have been sustained negative effects on Gross Domestic Product (GDP), resulting in cumulative fall of GDP by over 40% for the past 8 years, giving rise to unprecedented increase in poverty levels and general despondency.

 

1.1.6. Given the aforementioned, the task of turning around the economy, therefore, becomes the toughest job of the Inclusive Government.

1.1.7. Notwithstanding this challenging obligation, the new Inclusive Government is committing itself to putting Zimbabwe people and the country first by addressing the above challenges, geared towards turning around the economy and, hence, afford the people of Zimbabwe better living standards.

1.1.8. Mr Speaker Sir, as I move this debate in this August House, I propose to revise the 2009 Budget taking account of the above and inclusive of the following:-

· Alignment of tax and other economic measures to the Short Term Emergency Recovery Programme (STERP), including any new initiatives and revisions where appropriate.

· Downward revision of the overall 2009 Budget Framework in line with actual developments in January, February and early March 2009.

· Reconfiguration of the Estimates of Expenditure (Blue Book) to incorporate additional Ministries in line with the formation of the Inclusive Government.

REALITY CHECK

2.1.1.In the four weeks that I have been in the Ministry of Finance, there are three key lessons that I have learnt very quickly.

2.1.2.The first being high levels of demand on the fiscus, the second being huge expectations, and the third being limited capacity to deliver on the part of the fiscus.

2.1.3.The demands on the Treasury are high and appear limitless. These range from short term requests by Ministries for such simple items as furniture for new offices, transport and subsistence allowances, fuel, vehicle hire and maintenance, conferencing and air fares, to more pressing demands such as water purification chemicals for local authorities, as well as longer term demands for infrastructural rehabilitation and reconstruction.

2.1.4.Furthermore, our embassies in foreign countries require over US$3 million per month. This obligation is before account is taken of the over US$30 million we have incurred in arrears as at December 2008.

2.1.5.There are also unbudgeted requests from sports associations such as ZIFA, as well as some individual sports clubs.

2.1.6.In this context, you have perennial vehicles of fiscal drainage, for instance, the more than US$1 million weekly requests by Air Zimbabwe and other unbudgeted parastatal bailouts.

2.1.7.Thus, if one is not careful, one is reduced to focusing on fire fighting issues in the allocation of very meager resources. Very easily, one can lose focus on the bigger developmental role of Fiscal Policy.

2.1.8.Having a reality check, having a plan and having priorities simply becomes imperative.

Modest Revenue Receipts

2.2.1. The original Budget of 29 January 2009 was predicated on a Budget assumption of revenues of US$1.7 billion, which averages US$140 million a month.

2.2.2. Our revenue realisations, however, have been modest. In February 2009, we collected US$25 million, and as of now, we have just managed to collect US$30 million which will be hardly enough for civil service allowances.

2.2.3. The reality, therefore, is that the only thing that we so far have been able to do on our own has been to just pay the modest civil service allowance of US$100 a month, and other modest requirements for Government operations.

Skewed Nature of the Tax Structure

2.3.1. Historically, the single biggest source of revenue in Zimbabwe has been Pay As You Earn (PAYE) which in general terms has contributed close to 40% of our tax revenue.

2.3.2. The sad scenario in our current situation is that PAYE in the two months to date has been very insignificant, and indirect taxes, in particular Value Added Tax (VAT) have also not fully recovered.

2.3.3. This is a reflection of the high levels of unemployment, and the fact that many businesses had gone informal. Furthermore, most employers are not yet able to pay significant foreign currency salaries.

2.3.4. The Table below contrasts historical developments against the revenue outturn in the first two months of the 2009 Budget, that is January and February.

Tax

1996 - 2004 average (%)

2009

Jan - Feb (%)

PAYE

38.65

7.47

Corporate

11.04

4.01

Other Direct Taxes

6.19

5.78

Direct Taxes

55.88

17.26

Sales Tax/VAT

24.03

21.96

Customs Duty

13.15

38.06

Excise Duty

5.09

20.88

Other Indirect Taxes

1.84

1.85

Indirect Taxes

44.12

82.74

Total

100.00

100.00

2.3.5. Quite clearly, the above situation where direct taxes account for only 17% of total revenue if not reversed during the remainder of 2009 is undesirable. That is why it makes sense that any economic recovery and rehabilitation programme in Zimbabwe has to be capacity based.

Engagement of the International Community

3.1.1.Mr Speaker Sir, given that over and above the initial proposed 2009 Budget provisions of US$1.7 billion we face other emergency financial requirements to end of the year amounting to over US$2 billion, it is imperative that we engage the international community for financial support.

3.1.2.Such support is required to augment items in the Budget related to the delivery of urgent public services in health, education, water, sanitation, food security, infrastructure rehabilitation, among others.

3.1.3.The international community will also play a critical role in supporting self liquidating lines of credit required by our industries to restore production levels.

3.1.4.This way, Mr Speaker Sir, we will take advantage of the peace and stability we are beginning to experience following the formation of the Inclusive Government, that way also mitigating scope and opportunity for social discord which no one wants.

Death of the Zimbabwe Dollar

4.1.1.Since February this year, the Zimbabwe dollar is no longer a currency that the public and any trader will accept. Our national currency has, thus, become moribund. Financial assets denominated in Zimbabwe dollars have become valueless, thereby wiping out a large portion of national savings.

4.1.2.The immediate implications of this are devastating:

· The level of economic transactions in our economy will be determined by the amount of foreign money supply. We start out with a small stock of inflows of South African rands and United States dollar notes in circulation and minimal foreign currency accounts (FCAs) deposits. Increasing our access to the required higher foreign currency supply, critical for GDP growth, requires us to export more than we import and to maximise whatever remittances from our fellow Zimbabweans abroad, attract foreign loans and grants through what cooperating partners are able to provide.

· All economic enterprises, from the informal sector, street vendor, to the largest national corporates listed on the stock exchange, must henceforth trade and meet their tax obligations in foreign currency.

· In respect of the National Budget, we are immediately operating on a cash basis. We are only able to spend what we receive in tax revenues, fees for services and subventions from development partners.

4.1.3.The net effect of the above, including lack of Budgetary support, reduced income levels and the death of the Zimbabwe dollar, must result in us doing the following:

a. Embarking on cash budgeting;

b. Creative ways of raising additional financial resources, including disposal of 'family silverware';

c. Dealing with hygiene issues and proper implementation of the letter and spirit of the Global Political Agreement (GPA).

4.1.4.Out of an abundance of caution, I will now expand on the concept of cash budgeting and creative fundraising.

Cash Budgeting: What We Gather is What We Eat

4.2.1.The natural law of cash budgeting is "what we gather is what we eat" or "We eat what we kill."

4.2.2.This is the basic economic law of all hunting communities. No Ministry or public agency should expect to eat beyond what we have gathered through collection of taxes, fees and any other legitimate sources of revenue.

4.2.3."What we gather is what we eat" unambiguously defines the priority not just in the Ministry of Finance but throughout all arms of Government. If we want to continue eating, we must all focus our minds and energies on maximising the revenues that are needed first to get those of us in the public sector back to work and then to implement all of the pressing issues.

4.2.4.As a matter of fundamental economic policy, all sources of public revenue must be directed and remitted to the Treasury.

4.2.5.Government agencies providing fee-earning services will be allowed to retain part or all of their earnings. This will be on a case-by-case arrangement with Treasury, as provided for in Treasury regulations.

4.2.6.Retention of part of the fee revenue collections, rather than 100% remissions to the Treasury, is intended to provide an additional incentive for diligent collection of due revenues from fees and charges.

Confidence Building Measures

4.3.1.As I have already alluded to, without significant external financial resources it will be difficult to support STERP and other Government programmes critical for us to overcome cycles of economic decline, and alleviate poverty.

4.3.2.In this regard, the key Political and Governance reforms that are emphasised in the Global Political Agreement and STERP, particularly the issue of a "new people driven Constitution" and the process of national healing are as important as the measures to lay the economic foundations for the resumption of growth and social development in Zimbabwe.

4.3.3.In short, what is required is to create confidence and sculpt a construction that Zimbabwe is on an irreversible paradigm shift.

4.3.4.Over and above the SADC initiatives underpinned by South Africa, there should be serious engagement with all cooperating partners, including the World Bank, International Monetary Fund, as well as the African Development Bank, with the objective of restoring the country's status as a credible recipient of external financial assistance.

4.3.5.As confidence is restored, private sources of external finance will also become available to Zimbabwean companies and banks.

4.3.6.Hence, as part of this strategy should be an aggressive programme of bilateral engagement with all the key strategic countries.

4.3.7.Meanwhile, before the above gestates, it is important to consider disposal or rationalisation of one or two of the country's 'silverware'.

4.3.8.In addition, we should also consider issues of Public Private Partnerships, particularly in the field of health and infrastructural development, issues of external bonds, an Investor Conference, as well as an aggressive Zimbabwe Road Show Marketing Programme.

KEY PILLARS OF STERP

5.1.1. Pursuant to the above Reality Check and the overall economic challenges we face, it became imperative that an emergency stabilisation programme had to be crafted. Thus, in a matter of days, we set down as a Ministry and, in consultation with our stakeholders, formulated STERP.

5.1.2. Mr Speaker Sir, under STERP, cognizance is taken of the fact that an agenda for economic stabilisation that does not address the issues of democracy and governance is not sufficient.

5.1.3. Therefore, the key pillars of STERP include:

 

Democratisation

5.2.1.The Global Political Agreement recognises that the foundation for a new Zimbabwe needs to address not only economic issues, but also related issues such as:

· the rule of law;

· crafting of a new people driven Constitution;

· restoration of property rights;

· restoration of political legitimacy;

· freedom and liberties;

· restoration of personal measures;

· opening up of the media; as well as

· the restoration and re-integration of Zimbabwe into the community of nations.

5.2.2.Furthermore, it is trite that without a well functioning economy, democracy and human rights are impossible and equally, without a well functioning democracy, economic development is impossible.

5.2.3.Mr Speaker Sir, STERP, therefore, recognises the irreversible commitment of the Inclusive Government to the making of the new Constitution as defined under Article 6 of the GPA. This should be commenced as a matter of urgency. The Constitution reform process will open up debate, and usher in a new society able to tolerate different views without confrontation and, thus, promoting national healing.

5.2.4. Also critical to the democratisation matrix is the imperator of liberalisation of the air waves, freeing the media, and ensuring that plural voices are heard through both the electronic and print media.

5.2.5.Over and above this, the GPA recognises the importance of creating a vibrant and free media as an important democratic aspect. Therefore, legislation will be passed cementing the enjoyment of the right of freedom of expression and freedom of association. Hence, the review of such laws as the POSA, AIPPA and the Criminal Code will be speeded up.

5.2.6.Indeed, some of these rights have been recognised under the Constitutional Amendment Number 19. Therefore, the democratisation agenda should eventually ensure that there is a democratically elected Government of Zimbabwe based on the new Constitution.

Values and Aspirations

6.1.1.The Inclusive Government is founded on certain values that are at the core and epicenter of STERP. The preamble to the GPA acknowledges that 'the values of justice, fairness, openness, tolerance, equality, non discrimination and respect of all persons without regard to race, class, gender, ethnicity, language, religion, political opinion, place of origin or birth are the bedrock of our democracy and good governance'.

6.1.2.In addition, the GPA itself has a vision of the new Zimbabwean society that is 'free of violence, fear, intimidation, hatred, patronage, corruption and founded on justice, fairness, openness, transparency, dignity and equality'.

6.1.3.STERP is loyal to the above aspirations and values, which are essential and critical to get Zimbabwe moving again. In this regard, the issue of corruption and combating corruption particularly in the public service is vital to the enforcement of the above values.

6.1.4.Combating corruption will involve strengthening the Judiciary, the Attorney General's Office, the Anti-Corruption Commission and more importantly ensuring that high standards of accountability and honesty are maintained in the public service.

6.1.5.Government and parastatals cannot be institutions of handouts and, therefore, all leakages must be plugged.

6.1.6.In addition, where possible, new Laws will be enacted, while present Laws such as the Prevention of Corruption Act will be strengthened.

Social Protection Programmes

7.1.1.The provision of adequate and quality basic social services is a key area of this Programme. The liberalisation of the foreign exchange market as well as the removal of price controls will also have implications on vulnerable groups in our society.

Education

7.2.1.Mr Speaker Sir, STERP will give priority to the resuscitation of the education sector, which had almost grounded to a halt after having seen most schools failing to open at the start of the school's calendar year in January.

7.2.2.Priority will centre on improving conditions of service for the teachers, including providing incentives to attract those in the diaspora, the marking of 2008 public examinations, as well as provision of learning material and equipment in schools and other tertiary institutions.

Health Delivery

7.3.1.The economic decline has resulted in a sharp decrease in funding for health in real terms. This has directly contributed towards an unprecedented deterioration of health infrastructure, loss of experienced health professionals, drug shortages and a drastic decline in the quality of public health services.

7.3.2.For example, highly experienced health professionals left the health sector as evidenced by the high vacancy levels. There are about 68% of vacant posts for Doctors.

7.3.3.Other challenges include serious shortage of functioning essential medical equipment, high burden of preventable diseases such as malaria, HIV and AIDS, Tuberculosis, diarrhoeal diseases, maternal care.

7.3.4.Mr Speaker Sir, a major focus of STERP will, therefore, be on interventions to resolve the above challenges, consistent with the objectives of achieving the Millennium Development Goals.

7.3.5.This will require both internal and external resources.

Specially Targeted Vulnerable Groups

7.4.1.Mr Speaker Sir, with regards to vulnerable groups which include the elderly, orphans and child headed families as well as the physically challenged, the Programme provides for enhancement of publicly funded social safety nets, with specific allocations made for vulnerable groups and those institutions catering for such people.

Humanitarian Assistance

7.5.1.Food relief would be required for the remaining period to harvest time. Over and above the food relief, urgent humanitarian assistance is also required in the area of water and sanitation.

7.5.2.Mr Speaker Sir, such support will empower local authorities under whose mandate water management has reverted back to.

Supply Side Reforms

8.1.1.Mr Speaker Sir, I have already alluded that the economy has been under severe stress, with annual real GDP growth suffering declines averaging -5.9% since 2000. Cumulatively, output declined by more than 40% during that period.

8.1.2.The deepening economic crisis is reflected in sectoral performances, which followed the same trend. Since 2006, virtually all sectors recorded declines in output, with agriculture, manufacturing and mining estimated to have declined by 7.3%, 73.3% and 53.9%, respectively, in 2008.

Agriculture

8.2.1.Under STERP, the key issues which will be addressed in order to facilitate productivity in agriculture will also focus on the land issues.

Mining

8.3.1.Mr Speaker Sir, in the mining sector, measures are aimed at raising the capacity in mineral production. Continuous exploration, as well as beneficiation and value addition of minerals will benefit from joint venture strategic partners who have the necessary technology and foreign currency back-up.

8.3.2.A key component of STERP in reviving the mining sector will be to ensure that international commodity prices are levied and received by mining houses. In short, the pricing gap in respect of which domestic prices lagged behind international prices is a thing of the past.

8.3.3.Mr Speaker Sir, to enhance value, the framework for the marketing of all minerals. In the case of Gold, the same will remain a strategic reserve asset whose licensing and marketing will be in line with the Gold Trade Act.

8.3.4.Taxation and royalty levels will, however, be reviewed in line with international best practices.

Manufacturing

8.4.1.Mr Speaker Sir, the manufacturing sector will be at the epicentre of this stabilisation programme. The sector is already beginning to benefit from the decontrol of prices, and should further benefit from arrangement of external lines of credit for the importation of raw materials and retooling, thereby ensuring that the current industrial capacity utilisation is increased from the current low levels of around 10% to over 60% in the next six to nine months.

8.4.2.Mr Speaker Sir, total requirement for lines of credit facilities will be in excess of US$1 billion, for the short term period to year end.

Tourism

8.5.1.Mr Speaker Sir, regarding revival of tourism, STERP is prioritising securing external lines of credit for working capital, rehabilitation of infrastructure and importation of capital equipment, launching an aggressive marketing campaign covering regional and international markets as well as improving access to resorts by allowing more airlines into the country.

8.5.2.The Nation's Tourism Strategy will also be fast tracked to take advantage of the 2010 World Cup to be hosted by South Africa.

Construction

8.6.1.In order to resuscitate construction activity in the country, Mr Speaker Sir, construction companies will also benefit from access to external credit facilities being organised by Government. This will ensure financing for retooling and equipping of the industry.

Housing

8.7.1.The enhancement, evaluation and improvement of the current national housing policy will be carried out during STERP in order to take advantage of significant portions of land acquired under the land reform programme by local authorities for housing, as well as enhancing the servicing of such land.

Demand Side Reforms

9.1.1.Mr Speaker Sir, the precondition of any capacity based stabilisation programme is the implementation and execution of a sound macro-economic stabilisation programme. Certainty and credibility has to be established with regards to money supply, interest rates, inflation and a credible exchange rate management framework.

9.1.2.Also central to the macro-economic stabilisation is the obligation to ensure strict fiscal discipline of a carefully managed budget deficit and one that is not funded by the printing of money.

9.1.3.Mr Speaker Sir, the macro-economic stabilisation measures I propose below are, thus, predicated on certain key fundamental principles which are:

· Cash budgeting for fiscal discipline;

· A positive real interest rate regime;

· Raising savings to above 25% of GDP;

· A vibrant labour market policy;

· A Social Contract, based on respect of the contracting parties;

· A market based exchange rate regime;

· Use of multiple currencies as legal tender, and

· The removal of foreign exchange surrender requirements.

Inflation

9.2.1.To get Zimbabwe moving again, it is critical that the hyper-inflationary environment be a thing of the past. Three issues were at the epicentre of hyperinflation in Zimbabwe.

9.2.2.These are the absence of meaningful production, which would mean that at any given time, demand exceeded the supply of the few goods available.

9.2.3.Secondly, has been the budget deficit financed through printing of money.

9.2.4.Third, has been the engagement in illegal and excessive quasi-fiscal activities that have been done outside the provision of the Constitution of Zimbabwe.

9.2.5.Basing this Programme on capacity expansion clearly addresses the first inflation driver.

9.2.6.Furthermore, the use of multiple currencies will also eliminate the habit of printing money.

9.2.7.More importantly, consistent with the 2009 Budget Statement, quasi-fiscal activities by the Reserve Bank are to be ceased forthwith.

9.2.8.Treasury, as overseer of the Reserve Bank Act, the Audit and Exchequer Act, will ensure that these laws are strictly complied with and more decisively that the Constitution is complied with fully in so far as all outlays from the Consolidated Revenue Fund have to be approved by Parliament.

Utilities, Amenities and Infrastructure

9.3.1.Mr Speaker Sir, STERP also prioritises the enhancement of efficiency in delivery of public services, including water reticulation, by our public enterprises and local authorities.

9.3.2.Reforms for the public enterprises will focus on re-capitalisation, commercialisation, privatisation and part, or outright, disposal as well as allowing the charging of cost reflective tariffs.

9.3.3.Total requirements for the above are estimated at US$740 million, as indicated earlier on.

Energy

9.4.1.'Getting Zimbabwe Working Again', requires that the country has adequate and reliable energy supplies at all times.

9.4.2.In power, the following are critical imperators, whose requirement is estimated at over US$1 billion:

· Completion of Stage 1 of the Hwange Power Station rehabilitation;

· The expansion and increase of capacity at Kariba South Bank;

· The rehabilitation of the transmission and distribution infrastructure in Zimbabwe;

· Securing long term import lines in respect of the country's power deficits.

Infrastructure

9.5.1.Mr Speaker Sir, the Programme also prioritises provision of public resources for the rehabilitation of infrastructure, such as railways and roads, among others.

9.5.2.This will be complemented by private sector participation.

Local Authorities

9.6.1.Service delivery in housing, health, road maintenance, waste collection, street lighting, among others, will receive attention and funding, benefiting from the charging of economic tariffs.

ORIGINAL BUDGET PROPOSALS

10.1.1. Mr Speaker Sir, the 2009 Budget presented by the Acting Minister of Finance to Parliament on 29 January 2009, provided for revenues of US$1.7 billion and expenditures of US$1.9 billion.

 

10.1.2. The 2009 Budget was premised on a macro-economic framework targeted at reduction of inflation to double digit levels as well as attain a positive economic growth rate of about 2%.

10.1.3. Nominal GDP of US$5.5 billion was projected. Informed by past trends where revenue collections are normally about 30% of nominal GDP, revenue for 2009 was therefore projected at US$1.7 billion.

10.1.4. The estimate was premised on the implementation of proposed fundamental macro and micro economic reforms, as well as legal and institutional reforms targeted at stimulating positive supply response in the manufacturing, tourism, mining and agricultural sectors, thereby increasing economic activity.

Revenue

10.2.1. Mr Speaker Sir, implementation of some of the revenue measures such as road tolling fees, which were targeted to raise a substantial amount of revenue, have however been delayed, pending approval of the Finance Bill by Parliament.

10.2.2. Furthermore, most companies have paid subsistence allowances to their employees, and not actual salaries, resulting in low Pay As You Earn (PAYE) collections.

10.2.3. Although customs duty rates have been revised downwards, the volume of trade has nevertheless declined, hence customs revenue inflows to the fiscus have not performed as anticipated.

10.2.4. In spite of improvements in the supply of goods on the local market, VAT collections have, however, been low owing to low disposable incomes which resulted in most consumers spending on non-vatable basic commodities.

10.2.5. Mr Speaker Sir, cumulative revenue collections in January and February 2009 amounted to US$36.8 million. This clearly fell short of expenditure demands given that employment costs alone would have amounted to about US$60 millionhad payment of allowances in foreign currency been effected from January 2009.

10.2.6. The low revenue collections have already forced us to pay public servants and pensioners only foreign currency denominated allowances from February and March, respectively.

PROPOSED REVISION OF THE 2009 BUDGET

11.1.1. Mr Speaker Sir, STERP and the 2009 Budget should consolidate our key macro-economic policy shifts, most of which are already beginning to bear fruit.

11.1.2. Therefore, as I move the 2009 Budget debate, I propose to revise the 2009 Budget taking account of the following:-

  • Downward revision of the overall 2009 Budget Framework in line with actual developments in January, February and early March 2009.
  • Re-configuration of the Estimates of Expenditure to incorporate additional Ministries in line with the formation of the Inclusive Government.

Revenues and Other Policy Measures

12.1.1. Mr Speaker Sir, as a result of developments to date which I outlined earlier, revenue anticipated for the 2009 fiscal year is accordingly being reviewed downwards from US$1.7 billion to US$1 billion.

12.1.2. Following post Budget consultations with some of our stakeholders, I am proposing to review some of the policy measures that were announced during the 2009 National Budget.

Multiple Currencies

12.2.1. Mr Speaker Sir, the 2009 first quarter Monetary Policy Statement compelled all traders to adopt a dual pricing framework where goods and services would be quoted in both local and foreign currency.

12.2.2. This requirement was enforced through Statutory Instrument 5 of 2009.

12.2.3. Dual pricing promotes unintended consequences whereby some traders and shop owners attempt to avoid meeting their foreign currency tax obligations by misrepresenting actual transactions as having been undertaken in Zimbabwe dollars. In reality, at present, no business is still trading in the local currency.

12.2.4. With immediate effect, therefore, Statutory Instrument 5 of 2009 has been revoked to enable the use of multiple currencies in order to facilitate trade and tax collection in the economy.

12.2.5. The necessary amendments to the Exchange Control Act allowing for use of multiple currencies as legal tender will be effected.

Flat Rates of Duty

12.3.1. For convenience of travellers, a flat 65% rate of duty is charged on excess goods that are not accommodated in the travellers' rebate of US$300 per calendar month.

12.3.2. The flat rate of duty was set at a time when duties were high, hence, I propose to review downwards this rate of duty in line with reduced customs duty rates as follows:

Product

Current rates of Customs Duty

Proposed rates of Customs Duty

Clothing

40 - 60% + US$10 per kg

40% + US$5 per kg

Foot wear

40%-60% + US$5 per pair

40% + US$5 per pair

Other goods

65%

40%

12.3.3. This measure will facilitate swift clearance of goods, thereby reducing long waiting hours endured by travellers at ports of entry, especially at Beitbridge border post.

Customs Duty Credit facility on Licensed Customs Clearing Agents

12.4.1. Mr. Speaker Sir, the current Customs and Excise legislation obliges importers to pay customs duty due upon registering a Bill of Entry. Since the introduction of payment of duty and VAT in foreign currency, importers face challenges to effect payments to clear their goods. This is mainly due to delays in the banking system, whereby transfers take as long as five days to reflect in the ZIMRA account.

12.4.2. As a result, cargo remains uncleared for longer periods, thereby causing congestion at ports of entry. Importers also incur demurrage charges, which increase the landed cost of goods.

12.4.3. In order to facilitate prompt movement of goods, I propose to introduce a customs credit facility, valid up to seven days. This facility will be granted to selected importers and clearing agencies.

Rummage Sales

12.5.1. Mr. Speaker Sir, ZIMRA last conducted rummage sales for motor vehicles and other durable goods in 2007. As a result, there is now congestion of unclaimed vehicles and other durable goods at border posts. Furthermore, these goods continue to deteriorate because of exposure to adverse weather conditions.

12.5.2. ZIMRA, working together with the State Procurement Board, has been directed to conduct rummage sales immediately. In addition to decongesting the border posts, rummage sales will also generate additional revenue for the fiscus.

Accelerated VAT Remittance Period

12.6.1. VAT payment dates have been brought forward to the third day of the following month in order to improve cash inflows to the Exchequer Account.

12.6.2. Mr Speaker Sir, in order to reduce administrative problems associated with reconciling sales from several depots, I propose to shift the VAT payment date from the third to the fifth of the following month.

Tax on Miscellaneous Income Deposits into Individual & Corporate Accounts

12.7.1. A special tax had been proposed on deemed unproductive income deposited into individual and corporate accounts for purposes of discouraging exchange rate related speculative activities.

12.7.2. Given policy and other market developments, such a tax is no longer relevant as transactions are now in foreign currencies.

PAYE in Foreign Currency

12.8.1. Mr Speaker Sir, the 2009 Budget proposed a separate PAYE Tax Table with a tax free threshold of US$125 per month.

12.8.2. Given market developments, I am therefore proposing to increase the tax free threshold to US$150 per month with effect from 1 April 2009.

Presumptive Tax

12.9.1 Mr. Speaker Sir, presumptive tax was introduced in order to capture the hard to tax informal businesses that remain outside the tax net. There has however been minimal progress in terms of revenue generated due to non-compliance by most informal sector businesses.

12.10.1. In order to encourage tax compliance by informal businesses, I propose to empower the Revenue Authority to issue a provisional attachment order, after which failure to pay tax due would result in the auctioning of the attached asset.

Foreign Currency Surrender Requirements

12.11.1. Mr Speaker Sir, the Monetary Policy Statement of 2 February 2009 contains the foreign currency surrender regimes.

12.11.2. Under this regime, all licensed traders were to sell 5% of their gross sales to the Reserve Bank at the going market exchange rate.

12.11.3. Similarly, under this surrender framework, all exporters, including gold producers, were required to sell upfront to the Reserve Bank 7.5% of their gross export proceeds in their Foreign Currency Accounts (FCAs).

12.11.4. Mr Speaker Sir, given that all businesses now transact in foreign currency, any requirement on their part to surrender a portion of their proceeds is tantamount to imposition of a tax on business proceeds. Such tax of a presumptive nature on gross proceeds erodes markup of exporters to an extent whereby some businesses are rendered unprofitable, thereby, threatening their viability.

12.11.5. To the extent that surrender requirements are a tax, it means that the matter becomes a tax issue which is the domain of Parliamentary Budget approval. In this regard, I have issued a directive in terms of Section 62 of the Reserve Bank Act advising the Board to take note of this.

12.11.6. I therefore announce the removal of all foreign currency surrender requirements with immediate effect.

12.11.7. As a quid pro quo to the above, it is only fair that I review upwardly business taxes, to our limping business community, once I am sure that most of them have recovered.

12.11.8. I will, therefore, be announcing new tax measures in due course.

Stock Exchange

12.12.1. Whilst it is appreciated that fungibility in share trading would be ideal. This, however, in our case has tended to be used as a conduit for externalisation and is, therefore, not recommended for the time being.

12.12.2. I however wish to assure that we will consider this once bulls return to our bowels.

Revised Expenditure Proposals

13.1.1. Mr Speaker Sir, I have proposed revision of revenue projections for 2009 from US$1.7 billion to US$1 billion. Accordingly, pursuant to the balanced Budget thrust whereby expenditures are to be linked to actual revenues, I am proposing that the 2009 Expenditure Proposals be revised downwards from US$1.7 billion to US$1 billion.

13.1.2. The revised Budget will, to the extent possible, focus on the key areas identified under STERP, which I have alluded to earlier.

13.1.3. Mr Speaker Sir, I highlight below some of the Revised Budget provisions.

Remuneration of Public Servants including Pensions

13.2.1. Under the STERP, the payment of civil servants is recognised as the most pressing issue and, therefore, becomes the first charge on our revenues.

13.2.2. As I have already indicated, payments to our public servants in foreign currency could only be made as from February 2009 on the basis of an allowance fixed at US$100 per member while pensioners' allowances are only being paid as from March 2009.

13.2.3. Existing pension regulations provide for payment of pensions proportionate to payments to serving members. Current revenues dictate that we maintain payment of pensions in line with these regulations.

13.2.4. The current US$100 foreign currency monthly allowance paid irrespective of rank or grade to all civil servants is clearly undesirable. However, given that we now project lower foreign currency revenues in the revised Budget, I have been unable to either increase or differentiate the quantum of the allowance.

13.2.5. I have therefore set aside US$299.4 million covering payment of the foreign currency allowance for staff in the civil service, pensioners, and staff and grant aided institutions.

Health

13.3.1. The economic decline has contributed to the deterioration of health delivery, including the shortage of health professionals, inadequate supply of essential drugs, equipment and other medical supplies, inadequate provision and maintenance of equipment, infrastructure, ambulances and service vehicles. The provision of health facilities is critical in order to meet increased demand for services

13.3.2. The above have contributed to an increase in the incidence of preventable diseases.

13.3.3. In line with STERP, the revised Budget targets redressing the challenges in this sector. However for maximum impact from the limited budget provision, it is proposed that to avoid spreading resources thinly to all the health institutions, a new targeted approach be adopted.

13.3.4. Under this approach, funding available in any given period will be directed and concentrated towards critical requirements for one institution, starting with Harare Central Hospital, before moving on to the next institution.

13.3.5. Government funding of US$118 million, which excludes employment costs, will be augmented by the current interventions and expected contributions into the sector by our cooperating partners as well as revenue generated from fees and charges.

Water and Sanitation

13.4.1. The frequent occurrence of communicable disease outbreaks, such as cholera, is directly linked to inadequate provision of safe water and poor sanitation facilities country wide.

13.4.2. Therefore, responsible authorities for both rural growth points and urban centres have to be assisted to purchase chemicals, repair sewer and water conveyancing systems, construct and rehabilitate boreholes and provide suitable sanitation facilities.

13.4.3. Recognising the huge level of funding required on an emergency basis, the Revised Budget provision of US$10.5 million for selected urban local authorities will need to be complemented by external funding being sourced to support STERP.

13.4.4. To augment the Budget allocation, part of the revenue collected through rates, fees and other charges should be set aside for re-investment in equipment and restoration of the conveyance system.

Education

13.5.1. It remains critical that we address the challenges affecting the education sector, in particular, improving the conditions of service for teachers in order to ensure that they go back to work.

13.5.2. In addition, the lack of effective learning and teaching in our schools and institutions of higher learning is undermining public confidence in our education system and threatens to reverse the gains made, thus, far.

13.5.3. The integrity of our public examinations has also recently come under spotlight following the delays in their setting, conduct and marking.

13.5.4. To address some of these challenges, Government has allowed schools and institutions to charge fees which will allow for the procurement of adequate teaching and learning materials and other requirements.

13.5.5. Mr Speaker Sir, the Ministers of Education have already announced to the Nation the new fee structures in this respect.

13.5.6. To afford equal opportunity to education by all, especially the vulnerable, programmes are in place for them to access resources through the Basic Education Assistance Module (US$9.2 million) and the National Education Training Fund (US$5 million), including Cadetship.

Specially Targeted Vulnerable Groups

13.6.1. Under STERP, Government recognises that there will be some adverse effects on the vulnerable and disadvantaged groups within our society from the impact of measures that are being put in place, especially following economic liberalisation.

13.6.2. Therefore, the 2009 Revised Budget includes provision of US$32 million in support of the specially targeted vulnerable groups under the existing social protection programmes such as Public Health Assistance, Children in Difficult Circumstances, Public Assistance etc.

13.6.3. This is also an area where our cooperating partners may want to contribute by taking part in availing the much needed support.

Agriculture

13.7.1. The country stands to benefit from increased agricultural output as it will reduce on grain importation and also provide stimulus for the local industry. In addition, it is critical that programmes focusing on rebuilding the national herd start bearing fruit.

13.7.2. Given that Government has deregulated the marketing and distribution of agricultural products, this provides a window for farmers to access resources from the market.

13.7.3. On its part, the Revised Budget will focus on strengthening extension services under the departments of AGRITEX, Tsetse Control, Veterinary Field and Veterinary Technical Services.

13.7.4. Agricultural production also stands to improve, if irrigation capacity is increased through rehabilitation and development of irrigation schemes on underutilised existing water bodies as well as construction of additional dams. In this regard, an allocation of US$5.4 million has been set aside for the completion of Bubi-Lupane and construction of Mutange dams.

13.7.5. With regard to irrigation development, an allocation of US$18.1 million has been set aside for targeted schemes already espoused in the 29 January 2009 Budget Statement.

Infrastructure Development

13.8.1. Infrastructure in various sectors of the economy, especially water, roads, railways, airports and electricity now pose serious bottlenecks to the country's economic recovery and growth prospects.

13.8.2. The challenge we face in our efforts to rectify the situation arises from our inability to mobilise sufficient financial, human and material resources. The Revised Budget proposes to only make provision for the restoration of priority infrastructure.

 Other Operations of Government & Grant Aided Institutions

13.9.1. As recognised under STERP, the basic economic philosophy of our Budget is that 'what we gather is what we eat'. Therefore, the operational budgets of Government institutions can only be financed subject to availability of our foreign currency revenue receipts.

13.9.2. It is, therefore, critical that Ministries reduce non productive expenditure.

13.9.3. However, Budget provisions have to enable Ministries to undertake monitoring and evaluation of projects and programmes under their portfolio so as to realise value for money and ensure that resources reach intended beneficiaries.

13.9.4. Consistent with STERP, some Government agencies will augment their budgetary allocations through fee earnings from their services as they will be allowed to retain part or all of these earnings as an incentive for diligent collection of revenue.

CONCLUSION

14.1.1. The presentation herewith seeks to observe actual fiscal developments to date as well as operationalise relevant elements of STERP.

14.1.2. Mr Speaker Sir, given the downward revision in the Budget Framework I have proposed above, it has become necessary that the Budget Estimates (Blue Book) be amended to reflect revised provisions as well as incorporate the proposed Votes of new Ministries.

14.1.3. Mr Speaker, I seek the support of Honourable Members in considering and approving the 2009 Budget.

14.1.4. Government is ready to launch STERP, and I advise that all Members of Parliament are invited to participate in the launch on Thursday, 19 March 2009 at the Harare International Conference Centre, starting at 10:30 am.

14.1.5. Mr Speaker Sir, I have made arrangements for this Statement to be printed in Booklet form, which all Honourable Members will receive at the end of delivery of this Statement.

14.1.6. Mr Speaker Sir, I accordingly lay the 2009 Budget Expenditure Estimates on the Table of this August House, taking account of the new Ministries, as well as the rationalised envelope of US$1 billion.

14.1.7. I thank you.

MR. MASHAKADA (Speaking)…manje ndichaita shadow wani?- (laughter) - I want to commend my colleague, Hon. Biti the Minister of Finance for his maiden Budget Statement which was very comprehensive and touches a number of micro and macro issues which assume to pushing the inclusive government and delivering hope and progress to the people of Zimbabwe.

Mr. Speaker, in this budget I want to flag a number of positive issues that have come out. One of those issues is to do with the increasing of the tax-free threshold from US$100 to US$150. I think this is a thrust we must commend the inclusive government, as it will go a long way towards eradicating poverty and putting more money into the pocket of the worker. This budget has also done a very good thing in the sense that it has revisited the taxes on the foreign currency accounts and deemed it unnecessary to continue to tax those accounts. The removal of taxes on the foreign currency accounts is a laudable move by the Minister of Finance.

We also see that the customs duty has been revisited. You know very well as much as I do that the greatest cry in this country was the high levels of taxation - be it corporate, customs duty review, be it PAYEE and I am happy to note that the Minister has seen it fit and rightly so to at least reduce the tax burden on the importers and exporters by revisiting the customs duty from 65% to 40%. That is again commendable. Above all, the Minister has touched on an issue that has been of concern to all Zimbabweans across the entire political divide, the issue of surrender requirements on the proceeds of sales in foreign currency. The Minister has now in good time suspended all those restrictive surrender requirements. I think this is going to resonate very well with traders both small and large. I would want to commend the inclusive government for that noble move. Above all, I think that the Minister has placed a moratorium on the increasing corporate taxation, we also commend that. As the economy is trying to resuscitate itself, the moratorium is very good for the economy because at this juncture it would not be suitable to continue to burden the industrialists and producers. What we need to do is actually to help them increase the supply side of the economy so the moratorium in corporate taxes, I am sure will go a long way towards assisting the recovery of industry and also commerce.

Mr Speaker, in this budget we have seen a genuine attempt by government to resuscitate the ailing health sector. The Minister has exposed several measures to try and resuscitate the ailing health sector. He has also exposed several measures to try and resuscitate the education sector. All these measures should be commended coming as they do in a very short period of time. I think we must commend the inclusive government for this early turnaround. We hope that more progress can be seen on that front.

One of the critical areas in terms of infrastructural development was the issue of water management and water harvesting. We are again seeing in this budget serious efforts and attempts to resuscitate the water sector. I hope that that can also be supported. Above all, as you can rightly recall in Minister Chinamasa's budget, I complained about the omission of safe nets to deal with vulnerable groups. I am glad that the Minister has now addressed the need to look at vulnerable groups of our society. He has set aside US$32 million towards vulnerable groups which is a laudable move in terms of fiscal policy arrangements.

Mr Speaker, one thing that has been lacking in previous budgets is that the budget lacked an economic anchor or economic framework upon which to direct the budgetary objectives. In this budget, we have clearly seen that we now have a short-term economic recovery programme which is now going to be encompassed to guide the execution of the budget. So it is going to contextualise the direction and the compilation of this budget. We are very happy that the budget is now being seen as an instrument of economic policy management not just as a stand-alone fiscal feature. I want to commend the inclusive government in its entirety for that wisdom, at least to prepare the budget within a defined economic paradigm and this STERP that is going to be unveiled tomorrow.

Having said that, I also want to take this opportunity to highlight certain fundamental structural issues in the budget which I think are key to this debate. The first structural issue is the question of what I can call fiscal state. We must understand

the essence of the budget which I think are key to this debate. The first structural issue is the question of fiscal steps. We must understand that this budget is being presented at a time when the fiscal space or room to manoeuvre is very limited in the sense that there are no external budgetary support systems, limited in the sense that unlike in the previous budgets, there is no benefit of revenues accruing from the printing of money. So I am saying that is now an inter temporary budgetary constraint because they can not print money as they used to in the previous years. The other constraint which is going to impact on the fiscal space of this inclusive government is the quasi fiscal operations which have now stopped and I commend that to be a very positive move.

Therefore we must appreciate that both the fiscal space and macro economic space is very limited because of those sectors which used to be attended which are no longer there to be leveraged in terms of revenue generation. We therefore need to give the Minister full support as he has started in a fiscal cauldron. The government is broke and they are battling to get offices for everybody and in this context of a fiscal cauldron this inclusive government is trying to do something to kick start the economy.

I also want to commend the Minister for introducing transparency. He has alluded to the fact that he went to see the ZCTU to gather input on what should be done. That is the fiscal transparency that we want this government to continue to observe. We want them to go further to entrench the culture of fiscal transparency by actually enacting a Fiscal Responsibility Act. This act is a feature in most developing countries and it sets up all the fiscal rules which should be followed by the government. In order to enhance fiscal transparency we should go a step further and introduce a Fiscal Responsibility Act. I hope that will assist in giving a compass in terms of the management of budget.

Lastly, I just want to express caution on the issue of the cash budget. My fear is that the budget contract is cash in and cash out which in practice is not possible. As you know revenues are collected on an accrual basis and expenditure also is on an accrual basis. Therefore, what is tying the hands of government is the cash flow which indicates what is to be paid for according to the cash available. That is the only problem I have with the budget contract which is premised on a cash basis. Besides that I would like to commend the Minister for a good start.

MR. S. HOVE: I would like to begin by congratulating the Minister of Finance for being pragmatic and being honest enough with reality. I would say the essence in the manner he has presented the budget which is a financial plan of how to run and execute its mandate is a very welcome development indeed. It has been missing on a number of previous presentations and in that regard I would like to thank the Minister of Finance for spelling out clearly the economic and political considerations that we had to face and that we need to come out.

He also articulated a new action programme STERP which will be launched tomorrow by His Excellency the President which is a response to the situation prevailing on the ground. He went on to highlight the factors affecting the revising of the budgetary estimates as previously presented. He highlighted the need for tax alignment, revising downward of expenditure and reconsideration of the estimates bearing in mind that this is coming against a background whereby the Executive is being expanded from 29 to 36 ministries. This would have entailed the expansion of a budgetary estimate. I therefore really applaud the Minister of Finance for going against the expectations. He also went on to say this was coming against huge demands for cash. There was also the issue of capacity to deliver in the system as opposed to the huge demand. He also talked on the high expectations from the people. We want to understand why there is a huge demand for cash. There was also an issue whether there was capacity within the system to deliver based on those huge demands. There was the issue of the high expectations of the people and in all this, we would want to understand why there is huge demand, why looking at the capacity to deliver and why there are high expectations.

He went on to say that moderation of revenue receipts, turning them down rather than giving people an indication or being optimistic about cash receipts. I would really want to applaud him for being pragmatic. He also went on to talk about PAYE, VAT which were much lower than anticipated. He said that the reason why these instruments were realizing lower returns was to do with how the companies are rewarding their employees and they have moved away from paying them salaries into paying them allowances.

I want to thank the Minister of Finance for realizing it so early enough because most people go for a long stretch without realizing what is happening out there. I want to thank him for being in touch with reality which is happening out there. It is very pragmatic. He went on to allude to the ratio between indirect taxation and direct taxes. That ratio is very unhealthy in an economy that wants to be revamped, to be increased or that needs to see an upward turn whereby it is almost 2:1.

In that aspect he went on to try to take all the steam from the informal sector by reducing tax to make sure that things flow through the formal sector. The reason why the informal sector has been gaining ground in our economy thereby robbing the state of this fiscus was to do with higher taxation of whatever name the government might want to say customs and excise or even VAT itself. It is very commendable in that we are going to see the formal sector being resurrected and assuming its permanent role which will allow economic planners to plan.

I thank the Minister of Finance for reducing individual taxes and corporate taxes on free funds in people's accounts. This will again translate to increasing money to spend on the people thereby again generating the economic theme that is required to push our economy forward. It is going to increase cash in people's hands to be able to economically empower them without necessarily increasing inflation. I would say that move is commendable indeed unlike the previous presentations whereby the previous speaker alluded to that of printing money to empower people. The other thing which the Minister has said was the removal of the tax on foreign currency that was being surrendered at concessionary rates to RBZ. That is very commendable indeed in that we are seeing the realignment of a government structure operating in the single entity rather than a multi sectoral approach which is difficult for effecting government planning and economic direction.

Lastly I would like to thank the Minister of Finance for approaching this bench and defying all odds by just being straight to the point and that is what we mean, less talk and more action which is embedded in a word. Thank you Mr. Speaker Sir.

MR. GUMBO: I rise to respond and thank the Minister of Finance who has made a budget presentation and also to thank him for explaining why he has been able to come to the House and do that budget statement which he has said is a revision of the previously presented budget. In the spirit of the All Inclusive Government, we have agreed that after the presentation by the Hon. Minister, only one member from each party would respond and continue with the business. So I rise to make that intervention because I can see a lot of people writing notes because they want to quickly respond to what the Minister has said.

Mr. Speaker, I want to say that the presentation by the hon. Minister is welcome to us on this side of the House and we sincerely support it. We welcome the presentations that he has made. I just want to say that there are a lot of benefits that we enjoyed since independence in the expansion of health services, educational, transport and communication services but when one looks back, you will actually regret and say that all those gains have been reversed because of the economic situation that is prevailing in our country. It is very good news that we get from the Minister that if we, work together as a people, he is coming up with ideas which when fulfilled and if there is a political will from the three political parties represented in the House, then we can actually see great improvement in our economy and in the lives of our people.

Mr. Speaker, in the words of one of the writers, William Shakespeare, Julius Caesar, he mentioned politically that our destiny does not lie in our stars but it also lies in our own hands. I want to say to the hon. Minister that we as Zimbabweans are united and there is political will from all the politicians in this House we can succeed in changing the lives and the humanitarian crisis lives that we are facing as a people. Our destiny lies in our own hands. So without saying much about the speech, I would just take more time by just repeating what the Minister has said. It is enough to thank the Minister for coming up with this revised budget, which I think to most people, it is an indication that the all inclusive government is working and that we need to give it support. Politics yes, we always differ but the truth of the matter is that we must be united and have one aim and purpose, that is the development of lives of our people. It is important that we realise that at this time if we do not do things to change the lives of our people as Zimbabweans we would have failed our people's desire to move forward, to build our country, to change together and change our lives. It is important to realise what the minister is talking about. Looking at education when the challenges are addressed, our people benefit a lot. The salaries of all our workers; the health sector, mining, transport and all manufacturers if we look at all these areas and if we work together as the people and as a Parliament and support each other and direct our people as politicians, to work towards one common purpose and improve the system that make our government tick and work, then we will have achieved a miracle in a short space of time that we could not have achieved in five or ten years of fighting each other. I want to say to hon. minister that we are going to support it and you know that we are supportive of what you say and sincerely give you our support. I must also say that I realise that yesterday the hon. minister would not have spoken the way he did and I do not want to spoil it by saying anything that would be offending. I want to thank you very much.

Motion put and agreed to.

FIRST READING

FINANCE (NO. 2) BILL (H.B. 3, 2009)

THE MINISTER OF FINANCE pursuant to order, presentedthe Finance (No. 2) Bill (H.B. 3, 2009).

Bill read the first time.

Bill referred to the Parliamentary Legal Committee.

MOTION

BUSINESS OF THE HOUSE

THE DEPUTY PRIME MINISTER (MS. KHUPE): I move that Order of the Day, Numbers 1 to 4 be stood over until Order of the Day, Number 5 has been disposed of.

Motion put and agreed to.

COMMITTEE OF SUPPLY

MAIN ESTIMATES OF EXPENDITURE

Fifth Order read: Committee of Supply: Main Estimates of Expenditure.

House in Committee

Vote 1 - President and Cabinet - US$20 038 921.00 put and agreed to.

Vote 2 - Parliament of Zimbabwe - US$7 102 000 put and agreed to.

Vote 3 - Public Service - US$7 710 250 put and agreed to.

Vote 4 - Defence - US$64 866 100 put and agreed to.

Vote 5 - Finance - US$69 7666 300 put and agreed to.

Vote 6 - Vote of Credit put and agreed to.

Vote 6 - Audit - US$1 932 800 put and agreed to.

Vote 9 - Industry and Commerce - US$ 2 645 600 put and agreed to.

Vote 9 - Agriculture, Mechanisation and Irrigation Development - US$ 48 179 140 put and agreed to.

Vote 10 - Mines and Mining Development - US$5 491 000 put and agreed to.

Vote 11 - Environment and Natural Resources Management - US$3 363 700 put and agreed to.

Vote 12 - Transport and Infrastructural Development - US$37 475 400 put and agreed to.

Vote 13 - Foreign Affairs - US$22 455 300 put and agreed to.

Vote 14 - Local Government, Urban and Rural Development - US$21 538 700 put and agreed to.

Vote 15 - Health and Child Welfare - US$157 673 800 put and agreed to.

Vote 16 - Education, Sport, Arts and Culture - US$177 256 900 - put and agreed to.

Vote 17 - Higher and Tertiary Education - US$47 823 300 put and agreed to.

Vote 18 - Youth, Indigenisation and Empowerment - US$16 118 700 put and agreed to.

Vote 19 - Home Affairs -US$73 391 800 put and agreed to.

Vote 20 - Justice and Legal Affairs - US$37 612 100 put and agreed to.

Vote 21 - Media, Information and Publicity - US$1 686 000 put and agreed to.

Vote 22 - Small and Medium Enterprises and Cooperative Development - US$2 071 400 put and agreed to.

Vote 23 - Energy and Power Development - US$7 774 755 put and agreed to.

Vote 24 - Economic Planning and Investment Promotion - US$1 365 100 put and agreed to.

Vote 25 - Science and Technology Development - US$4 781 034 put and agreed to.

Vote 26 - Women's Affairs, Gender and Community Development - US$2 563 100 put and agreed to.

Vote 27 - National Housing and Social Amenities - US$7 683 200 put and agreed to.

Vote 28 - Water Resources Development and Management - US$4 735 400 put and agreed to.

Vote 29 - Constitutional and Parliamentary Affairs - US$8 781 100 put and agreed to.

Vote 30 - Tourism and Hospitality Industry - US$859 500 put and agreed to.

Vote 31 - Labour and Social Services - US$39 182 900 put and agreed to.

Vote 32 - State Enterprises and Parastatals - US$685 900 put and agreed to.

Vote 33 - Information, Communication Technology - US$779 500 put and agreed to.

Vote 34 - Public Works - US$12 009 800 put and agreed to.

Vote 35 - Regional Integration and International Cooperation - US$2 903 000 put and agreed to.

Vote 36 - Lands and Rural Resettlement - US$2 622 600 put and agreed to.

House resumed.

Progress reported.

Main Estimates of Expenditure reported without amendments.

Report adopted.

Bill ordered to be brought in by the Minister of Finance in accordance with the Main Estimates of Expenditure adopted by the House.

Motion put and agreed to.

FIRST READING

APPROPRIATION (2009) BILL

THE MINISTER OF FINANCE pursuant to order, presented the Appropriation (2009) Bill.

Bill read the first time.

Bill referred to the Parliamentary Legal Committee.

MOTION

PRESIDENTIAL SPEECH: DEBATE ON ADDRESS

First Order read: Adjourned debate on motion in reply to the Presidential Speech.

Question again proposed.

THE DEPUTY PRIME MINISTER (MS KHUPE): Mr Speaker, I move that the debate do now adjourn.

Motion put and agreed to.

Debate to resume: Tuesday, 24th March, 2009.

MOTION

CRISIS IN THE EDUCATION SECTOR

Second Order read: Adjourned debate on motion on the postponement of the opening of schools from the 13th to the 27th of January 2009.

THE DEPUTY PRIME MINISTER (MS KHUPE): Mr Speaker, I move that the debate do now adjourn.

Motion put and agreed to.

Debate to resume: Tuesday, 24th March, 2009.

ANNOUNCEMENT BY MR. SPEAKER

NON-ADVERSE REPORT RECEIVED FROM THE PARLIAMENTARY LEGAL COMMITTEE

MR. SPEAKER: I have to inform hon. members that I have received a non- adverse report from the Parliamentary Legal Committee on the Finance (No. 2) Bill.

SECOND READING

FINANCE (NO. 2) BILL

THE MINISTER OF FINANCE: I want to acknowledge the comments that have been made by members of this Honourable House like Hon. Mashakada, Hon. Hove, and Hon. Gumbo. As I have said to full members of the Cabinet this Budget that we have brought is predicated on three issues.

The first issue is that we need to have a credible fiscal policy; credible from the point of view of the resources that we have. We have a three months period of receiving revenue so that we will then be able to reduce the budget expenditure.

The second issue that I need to bring to the attention of members is that we now have an inclusive government. This inclusive government is one of the most important things. This government has to incorporate itself into the community of nations. We have to normalize our relations with the friends in the north, south, west, east, underground and the air and so forth. It is an important issue in the political agreement. The presence of high powered delegation from the IMF, World Bank and African Development Bank shows that we have started major discussions with them, and one of the things that is critical in these engagements is the issue of the policies. What are the policy directions that the government is pursuing? We are very proud that we have been able to craft our own policy before anyone has dictated the policy to us.

The third fundamental point is that this economy is going to turn around. The reality check that we provided into the budget is going to be very different construction in scenario come June/July of 2009. We will come here to do something that we have not done. To do a supplementary budget but this time it is not on general expenditure that has been already expended through printing of money but that our revenue base has increased. Because our revenue base has increased we now have something in that vote of credit which is zero and there is now something. We will be able to do that Mr. Speaker and if I do not do that Mr. Speaker I will change my name to John Chibadura. I do not intend to change my name.

The law, Section 103 of the Constitution of Zimbabwe does not permit us to budget in quarters or monthly. The urgency of our situation has demanded that we actually do that but our constitution does not allow us to do that. That is a provisional thing as we put our house in order. It is like we are hunting and we have set all these traps and we know that we are going to catch not just rabbit but the big game like the elephant and so forth. In June we will have caught big game and we will have big chunks. Hon Cabinet Ministers that feel that they should have got any amount that is equal to the Ministry of Education, Sports and Culture, it is temporary and the traps have been set and there will be big game and we will be able to slice it unlike the crumbs that we are still surviving on.

We are coming from a very difficult situation as a country. We have set the traps towards recovery to rehabilitate the state of our people and we have given our people a chance. As a theme "we are getting Zimbabweans moving again". We may be in gear number one at the moment or we have put the key on but we will be in gear number four in June before we get to gear number five. I urge the Zimbabweans that big game is coming and it is not my intention to change my name yet Mr. Speaker. I now therefore move that the Bill be read a second time.

Motion put and agreed to.

Bill read the second time.

Committee: With leave; forthwith.

COMMITTEE STAGE

FINANCE (NO. 2) BILL

House in Committee.

Clauses 1 to 60 put and agreed to.

House resumed.

Bill reported without amendments.

Third Reading: With leave forthwith

THIRD READING

FINANCE (NO. 2) BILL

THE MINISTER OF FINANCE: I move that the Bill be now read the third time.

Motion put and agreed to.

Bill read the third time.

ANNOUNCEMENT BY MR SPEAKER

SHORT TERM EMERGENCY RECOVERY PROGRAMME

MR. SPEAKER: All members are invited to the launch of the Short Term Emergency Recovery Programme (STERP) by His Excellency, President R.G. Mugabe. The launch is on Thursday, 19th March, 2009 at 1030 hours at The Harare International Conference Centre (HICC).

ANNOUNCEMENT BY MR SPEAKER

NON ADVERSE REPORT RECEIVED FROM THE PARLIAMENTARY LEGAL COMMITTEE

MR. SPEAKER: I have received a non-adverse report from the Parliamentary Legal Committee on the Appropriation (2009) Bill (H.B.4, 2009)

SECOND READING

APPROPRIATION (2009) BILL

THE MINISTER OF FINANCE: Mr Speaker Sir, again, I want to restate what I said before that this is a fire fighting budget until we rehabilitate our economy and again emphasise the fact that we will be coming here in mid term when our revenue situation has improved. We will definitely have an upward review of not just the revenue side but also the expenditure side.

Mr Speaker, I move that the Bill be now read a second time.

Motion put and agreed to.

Bill read a second time.

Third Reading: With leave, forthwith.

THIRD READING

APPROPRIATION (2009) BILL

THE MINISTER OF FINANCE: Mr Speaker Sir, I move that the Bill be now read the third time.

Motion put and agreed to.

Bill read the third time

On the motion of THE DEPUTY PRIME MINISTER (MS. KHUPE), the House adjourned at Four Minutes past Five O'clock p.m. until Tuesday, 24th March, 2009.

 

 

Last modified on Tuesday, 15 April 2014 07:55
BLOG COMMENTS POWERED BY DISQUS
National Assembly Hansard Vol. 35 NATIONAL ASSEMBLY HANSARD - 18 MARCH 2009 VOL. 35 NO. 23