Economist and academic, Tony Hawkins has said that President Emmerson Mnangagwa’s record of managing the economy since coming into power last November does not inspire confidence. Hawkins highlighted that the government was living well outside of its means and relying on printing money through the RTGS system. Writes Hawkins,
The record of macroeconomic mismanagement, including under the New Dispensation since the military coup last November, is stark. Domestic debt has escalated alarmingly; the balance-of-payments gap is widening; more and more is being borrowed offshore by private as well as official entities
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In the 2018 budget presented nine months ago, the former finance minister, Patrick Chinamasa, promised to cut the budget deficit from $2.5 billion, which was hugely understated at the time to $671 million this year.
But just before he left office after losing his seat in the July 31 election, Chinamasa’s ministry revealed that government spending, far from being cut, had jumped 57% in the first half of the year. The deficit for the 6 months was $1.4 billion and forecasters expect it to top 3 billion – more than 16% of GDP – in 2018, especially when the extra $300 million for the 17.5% pay rise for civil servants and the 20% hike for the military and police, is taken into account.
Such profligacy hardly inspires confidence in the fiscal consolidation promised by the president and his new cabinet.