Former Finance Minister Tendai Biti has slammed his successor Patrick Chinamasa for allegedly destroying the economy and taking it an unprecedented new low despite inheriting a fairly stable economy. Biti also claimed that Chinamasa was lucky to only get fired from the finance ministry as he could have been arrested. In an interview with the Daily News Biti said:
I think Chinamasa took this economy to a level and depth which no other person, which no other regime has ever taken us to. He inherited an economy that was fairly stable and the statistics speak for themselves. This is an economy that had scars and the huge scar that the economy had was the meltdown of the 1997-2008. An 11-year period in respect of which our economy lost 60 percent of its value and Chinamasa ought to have known that our economy is very cyclical; it goes through these cycles of slumps and booms. But particularly, this economy loves elongated periods of slumps. It loves to stay in a ditch. So as a Finance minister, your duty is to implement under cyclical fiscal policies to pursue thorough fiscal consolidation to prevent these slumps and booms. So, during the Government of National Unity (GNU), we maintained a very strong under cyclical fiscal policies anchored on fiscal discipline, we ate what we killed, anchored on macro-economic stability, anchored on financial sector stability.
I think that the person of Chinamasa must take a lot of responsibility. As the Finance minister you are left alone and there is very little collective decision making. As a minister of Finance, you have a huge blank cheque and the law anyway says you drive policy. If you read Section 7 of the Public Finance Management Act, it says you the Finance minister, you are the treasurer, then the accountant-general has a role. There are three mentioned, there is the minister as treasurer, the permanent secretary as the pay master general and then the accountant-general, who is like the internal auditor. In fact, the Act says you the minister, you are responsible for formulation of the macro-economic policy of the country, so the buck stops with you.
The minister of Finance is one minister whose job description is in an Act of Parliament, other ministers are not. So, you have a big responsibility, so in terms of managing the macro-economic of this country, Chinamasa failed. In fact, he was lucky just to be fired (from his position as Finance minister), in a decent country, he probably would have spent time at Chikurubi. In former Eastern Republican countries, he would have been subjected to a firing squad and his biggest mistake was not to understand the basic rules of economics.
You cannot spend that which you do not have and only in Mathematics does one minus two equal to minus one, in economics, one minus two it can’t! If you don’t have it you can’t spend. So, right now we are in a huge mess. Domestic debt right now is $6 billion dollars, the budget deficit is over 10 percent of gross domestic product. This year, his mid-term policy disclosed that he already had a shortfall of $1,4 billion by June of 2017. My suspicion with this Command Agriculture, with elections, by the end of the year December 31, 2017, the shortfall would be around $3 billion. When your budget is $4 billion and you have a shortfall of $3 billion that means that you are basically 90 percent out. So, it’s a dog’s breakfast one which not many dogs will not touch anyway.
Look at the crisis in the financial market. Reserve Bank of Zimbabwe (RBZ) John Mangudya right now is seating holding a mess, but it’s not his mess. The crisis that is manifesting itself as a monetary crisis, as a liquidity crisis, is not a monetary crisis, it’s a fiscal mess, it starts and ends with Chinamasa. We have a recession right now.
Number one; the key characteristics of a recession are that there is excess capacity. So you know there is excess capacity in the form of labour, 95 percent of the people are unemployed, the people you see selling tomatoes, driving kombis are people who actually want to have a job, like you have, like I have. So it’s excess capacity. Number two; you have excess industrial capacity. Companies have closed. If you go to Bulawayo today factories are being converted into churches. The Pentecostal movement is flourishing on this empty space which is supposed to be industrial space. The third characteristic of a recession is low inflation, that’s why since 2009; our inflation has roughly been one percent. The fourth characteristic of a recession is weak aggregate demand, so if you go to our shops right now they are full of goods but no one is buying because no one has got money, no one has got disposable income. Recession is lack of activity, recession is a crisis of under accumulation, which is the opposite of the crisis we had in 2008. The crisis we had in 2008 was a crisis of over accumulation. We were all billionaires and trillionaires but it was too much money chasing too few goods. In a recession, people have no money, so in 2008, we had a crisis of over accumulation, 2013 to now, we have a crisis of under accumulation. Now to get to these two crises, it’s almost impossible, but has been put by us in less than eight years. It’s impossible under ordinary circumstances to get to where we were in 2008, where hyperinflation was 500 billion percent. It’s almost near to impossible to get where we are now where growth rate is -1,8 percent. So these two are impossible to reach but Zanu PF is a genius, it has gotten us to this level. But their madness now is that they have put us in a third position which no other country has ever experienced, thanks to Chinamasa. We now have the concept of high inflation in a recessionary period, people have no money, how do goods go up? It’s crazy! They have superimposed these two scenarios which are impossible. If you look at our stock exchange right now, the market capitalisation is now $15 billion, so people are just buying shares like they are mad but these shares are not backed by anything, it’s just speculation. If you go to supermarkets goods that you bought last month for $100, you are now buying for $180. So Chinamasa has superimposed high inflation in a recessionary period. This is why I have said these guys have redefined failure and we have to find new lexicon, we have to write another dictionary to describe what they have done because what they have done is an insult to failure, what they have done is beyond failure and Chinamasa is responsible for that.
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