Zim eyes supplementary budget
The official said consultations were still in progress, but said the supplementary budget would only address urgent capital requirements. “A supplementary budget will be presented in June or July this year but this is subject to approval from key economic stakeholders,” said the official who preferred anonymity. The official said ministries have been lobbying the Ministry of Finance for additional funds, saying high inflation had eroded the purchasing power of funds allocated in the 2006 budget. “Many government departments are failing to pay for services rendered because funds allocated to them have been eroded by inflation,” said the official. The Minister of Finance, Herbert Murerwa, presented a $123,9 trillion national budget in December last year when inflation stood at 585,8 percent. It has since increased to 913,6 percent in March and is projected to pass the 1 000 percent mark by April, thus derailing government’s expenditure targets and fiscal planning. Figures releases by the Central Statistical Office last week show that the cost of goods and services had increased by more than five times between December and March. “Already, the majority of civil servants are lobbying for salary adjustments because their earnings continue to be eroded by inflation, a factor that really calls for immediate allocation for additional funds from the Treasury,” said the official. In the 2006 budget the income tax threshold was increased from Z$1,5 million per month to Z$7 million, but this was now a drop in the ocean when viewed against a poverty datum line of Z$35 million. Zimbabwe has had a supplementary budget every year since 2000, except in 2004. Analysts said the supplementary budget was unavoidable given the rise in the inflation rate between January and March this year. “Given the problems facing key ministries in servicing debts and other payments, it is apparent that the government will have to have a supplementary budget,” said Farai Dyirakumunda of Interfin Securities. He said inflationary pressures had wrecked havoc with ministerial budgets, with long-term planning now almost impossible. A lecturer in the Faculty of Commerce at the National University of Science and Technology, Oscar Chiwira, agreed, saying:. “A supplementary budget is inevitable because Zimbabwe is experiencing a hyperinflationary climate that has resulted in some ministries struggling to pay for crucial services,” he said. Chiwira said that the hyperinflationary climate had resulted in the ministries of Education and Health commercialising their services to raise additional cash. “The recent increases in educational fees and health fees are an indication that ministries are now commercialising services to generate funds to sustain their operations,” he said. Chiwira urged government to shift from an annual budget to a quarterly budget system until inflation comes down to manageable levels. “A quarterly budgeting system is required so that the government will review its fiscal policy on the basis of inflation,” he said.