Bernard Mpofu, Chief Business Reporter
Zimbabwe last year registered a budget surplus, ensuring that Finance Minister Tendai Biti scored good points in his austere measures that sought to restrict the budget to within revenue levels, but analysts said tight fiscal control was yet to restore confidence in the recovering economy.
Biti announced last week that a preliminary annual statement of financial acc-ounts for the year ended Dec-ember 31, 2011 indicated that total revenue collected stood at US$2,92 billion, against ag-gregate expenditure of US$2,89 billion. This wou-ld reflect a US$30 million budget surplus in an economy faced with a myriad of challenges. For him, this was a hallmark of his career in a country that has had deficits for many years.
Zimbabwe is one of the countries in the world with more than 80 percent of its people enduring unemployment and abject poverty, yet it is one of the few third world countries to declare a surplus. A surplus therefore becomes absurd.
The past year saw virtually all government ministries failing to receive the full amount of their vote allocation, a development that could make Biti's victory bare. With no budgetary support from multilateral institutions due to a growing sovereign debt, government has had to rely on internal revenues and limited regional financiers.
Public infrastructure has been run down and requires immediate resuscitation; the local healthcare sector is under stocked with drugs and the outbreak of typhoid has laid bare the poor sanitation facilities in the country.
The manufacturing sector on the other hand is staggering, while a restless public service is demanding a modest pay rise pronto.
These are but some of the headaches that Biti faces. Despite all these challenges, Biti still affords to pull a smile.
"We slightly overperformed by just over US$30 million in 2011 so that means we were able to live within our means and have a small surplus. We didn't borrow from anyone; we actually financed our expenditure obligations from our own resources. We have made the issue of cash budgeting a religion at the Ministry of Finance," Biti said.
Interestingly, out of the total revenues collected, US$1,8 billion accounted for employment costs.
Analysts also contend that given the tight fiscal space that government has been operating under since the adoption of the multiple currency system in 2009, Biti still has more to do.
Independent economist, John Robertson, gave Biti a thumbs-up for managing government expenditure so well, but however said it was still too early for the Finance Minister to pop the champagne bottle.
"The minister has done a remarkable job with such limited resources that he has. The country is still struggling though and this surplus does not mean that everything has been fixed. The job has not been done. There is Air Zimbabwe and ZESA which need immediate attention. Notwithstanding this, he has done well," said Robertson.
A stockbroking unit said the surplus was an indication "that government is really on course with its cash budgeting policy", but warned that the distribution of revenue by Biti remained a concern.
Despite his tight control on expenditure, said Kingdom Stockbrokers in a recent market update, "the distribution of collected revenue remains skewed towards recurrent expenditure and the civil service wage bill remains a nightmare for the government. Given the current industrial action by some civil servants who are demanding cost of living related wages, the 2012 employment costs are likely to remain above 60 percent of the total government expenditure".
Zimbabwe National Chamber of Commerce economist, Kipson Gundani, said the surplus should present the minister with an opportunity to re-direct his efforts to critical expenditure.
"The surplus is a clear testimony of fiscal prudence. We are on track but we should have a lot of issues to deal with. But in terms of growing the economy, we still have a long way to go. We still have capital expenditure variables to be financed. The Finance Minister needs to re-juggle expenditure to ensure that we commit significant amounts of revenue towards CAPEX (capital expenditure)," Gundani said.
In what could be a reaction to piling pressure to address capital expenditure obligations, Biti announced during his state of the economy address that he would withdraw US$110 million from the country's facility at the International Monetary Fund to support agriculture and infrastructural development. Zimbabwe has for years been importing energy from regional peers to cover for deficits from local power production.
Despite the challenges that lie ahead, government believes that Zimbabwe will continue to achieve a gross domestic growth of nearly 10 percent in the next three years.
University of Zimbabwe Professor, Tony Hawkins, however recently told business delegates at a conference that economic growth was likely going to reach a plateau this year.
"Indeed in 2012, we could well experience below trend growth (less than five percent) because of the reportedly-low level of agricultural plantings, the uncertain global economy and domestic political tensions," said Hawkins.
He maintained: "As capacity utilisation increases - in industry and in finance - so the recovery trajectory will flatten out, especially given the two binding constraints on expansion: electricity supply and long-term capital."
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