As recently reported by the Herald the government of Zimbabwe urgently seeks to have US$30 million worth of funding from the African Development Bank expedited. The money is earmarked for infrastructure projects. Some eagle-eyed citizens quickly noticed that the amount being requested from the AfDB pales in comparison to the ZWL$500 million (US$81 million at today’s interbank rate) surplus that Finance Minister Mthuli Ncube has been raving about recently. This then begs the question, where is the surplus?
According to the Herald, the money is sought for three specific infrastructure projects namely the Zimbabwe-Zambia-Botswana interconnector regional power project, the Zimbabwe Revenue Authority (Zimra) tax management system and AfDB contribution to Batoka George hydropower project. These projects and their funding arrangements were already in existence and what the government seeks is the speeding up of availing of the finances.
The government of Zimbabwe has consistently reported budget surpluses on a month to month basis this year and this has led many to ask why not use the surplus. This question may be dismissed as naivety if it weren’t for the words of Finance Minister Professor Mthuli Ncube who recently said the Intermediated Money Transfer Tax or 2% tax proceeds would go towards infrastructure. Clearly, something is not adding up.
The question of where the surplus is is not new at all. With the government making many efforts and policy announcements in an attempt to address the economic turmoil they have really come up short on delivery. While there are positive figures to tout here and there even a basic analysis of these figures will quickly inform you that all is not well. Our budget surplus is because of increased revenue not controlled expenditure, our trade deficit narrowing is because the cost of importing has become too much to bear while our improved results are being measured in a currency that has given up 60% of its strength in four months.
The Finance Minister faces a lot of scrutiny as his words tend to come back to him and rather quickly. Recently the announcement of a US$500 million loan facility to be drawn down for the interbank market in a move that was intended to increase supply and keep rates at bay only managed to precipitate an implosion of the RTGS dollar on both interbank market and the parallel market.
No matter how basic your economics or finance is one would recognize that it makes no sense to borrow money when you have money lying around losing value on a daily basis. A look at the projects that the funds are meant for tells you exactly what is in the finance ministers mind; electricity, tax revenue and electricity again. Electricity is certainly a critical issue and is truly in need of urgent attention. So much so we might rather use money that is immediately available.
Facts are stubborn things and massaging of figures only goes so far. For all the signs of prosperity that have come from our austerity, we have little to nothing to show for it.