Below are comments about Finance Minister, Patrick Chinamasa as he revealed that he is against price controls. He made these statements while addressing Parliament last week –
CHINAMASA: What I want to say Mr. Speaker Sir, this happened in a discussion in Cabinet yesterday, I told Cabinet that I am opposed to the reintroduction of price controls – [HON. MEMBERS: Hear, hear.] – they will worsen and exacerbate the situation. We must handle it in a market-friendly way and I think it can be done. The problems that we know are fiscal deficit and this is not a matter that should be a responsibility of a Minister of Finance and Economic Development alone, it is our collective responsibility, here at Parliament.
However, what assistance, what cooperation do I get, none? It cannot be resolved by the Minister of Finance alone, it has to be a collective responsibility. We have said it out here, we are spending 90% of revenue on wages, we have nothing on operations, PSIP infrastructure, and we have nothing. How do we hope to get out of our current situation? Those are the problems and these also trigger some of the instability in the market. People are receiving those high wages. They expect to be paid in cash but we cannot match those amounts in physical cash. They think that because we have put $300 million as a wage payment in their accounts that should translate to $300 million cash every month. It is not possible. So, until we realise that; which is why we are encouraging the usage of electronic money.
On fuel supplies, there are adequate fuel supplies. There is in stock 200 million litres of fuel in the country – [HON. MEMBERS: Where?] – Yes, we have. At the moment, every week the consumption is about 30 – 35 million litres. After the panic buying emptied the storage tanks, we have put 40 million additional litres into the market for this week. It is now just a question of logistics to deliver it to the service stations. There is no shortage and I want to underline that.
I agree with Hon. Mashakada that the parallel market is just a symptom of a problem but he puts it wrongly that the demand for cash is exceeding supply. If all the bank depositors and there are about seven billion bank deposits, if you all went out to look for physical cash, there is no physical cash and there is no economy that operates that way. The international best practice is about 10 – 15% of bank deposits that can be cash in circulation. In our case, it is about a billion which is about 16% of bank deposits. That is sufficient. What we have to address is the issue of low circulation of money due to hoarding and this can also be done in our individual capacities.
Hon. Mashakada is also right that in a dollarised economy, the key issue is the availability of foreign currency. So, for as long as foreign currency is not adequate to meet the basic needs, we should expect some de-stabilisation but I regard that Mr. Speaker Sir as a teething problem which we are going through and which can be resolved. One of the issues that has arisen Mr. Speaker Sir, some of our successes are the causes of our temporary problem.
For instance, we put S1 64 to protect local industries. They have been expanding production but to expand production to meet domestic demand they need foreign currency. So, the foreign currency which we have seen being generated, there is now more demand for foreign currency than there was yesterday. For me, it is a problem which is part of growing and we can handle it as we go along giving priority to those issues which we think must be given priority to.
An issue was raised about what priorities we are – the RBZ put out a circular which sets out the priorities that will be given to foreign currency and these are importation of raw materials, health and education materials, fuel, payment of dividends and repatriation of any capital where companies have been closed. We are giving priority to those because we feel those are essential to run this economy. I agree entirely with the list that he gave as sources of our foreign currency.
On exports, like I said, horticulture, gold, tobacco and platinum exports are up. What we have also done in addition is that we have said any foreign exchange receipt from the export of tobacco, gold, chrome, platinum and diamonds are a preserve of the RBZ. This will ensure of course in the first instance, that those who are generating that foreign currency are taken care of and then we will go to meet the needs of the priority items which are on the priority list.
The issue about investment climate – I agree with you and also on the issue of indigenisation which remains in terms of aligning the clarification by His Excellency to the law, remains unattended and continues to be an embarrassment to us but these are issues that we will address more forcefully now than before. I do not agree that bond notes are a problem. The problem is that there is lack of production. We have to increase production and exports. That is the only source of our solution in this country. As we grow the economy, the economy will need more and more foreign currency to import capital goods and raw materials, and we must have that foreign currency available.
Hon. Mandipaka, are there any intentions to introduce a local currency? Not now, we are not ready because we have not yet dealt with issues of confidence – [HON. MUDZURI: When will that happen?] – To get to that position, we must learn first to address the fiscal deficit. We must aim to address the trade imbalance which I must also say Mr. Speaker Sir, is narrowing. We must also address the issue of the current account deficit attracting more foreign currency or foreign direct investment. We must address the issue of a reserve or import cover for at least six months. Currently, it stands at 0,7% cover which is not enough. So, we have to address these issues in order to move forward.
Hon. Muderedzwa, what can we do to minimise leakages? We are doing everything within our power to minimise leakages and this is coming through revenue collection. We are strengthening the security in ZIMRA, passage of cargo transiting our country. We have introduced a cargo tracking system and CCTV systems at border posts. All these are intended to reduce and minimise revenue leakages but I must give this to ZIMRA. Notwithstanding these challenges, since the beginning of the year, because of the efficiency measures that have been introduced ZIMRA has been achieving above target revenue collections. So, the problem is not on the revenue collection but is on fixing or minimising expenditure. That is where the problem is. It is like they are raising more revenue but where is it going – to wages and more wages – [HON. ENG. MUDZURI: Because the culprit is Government.] – That is where we need to sort out the problem.
Hon. Khupe, thank you very much and I agree with you. Essentially, you make the point that we are scratching where it is not itching. It is not quite so because we are not scratching anybody – [HON. MEMBERS: Inaudible interjections.] – We are basically dealing with the fundamental issues. She mentioned production; the export incentive scheme is intended to increase production and in fairness to all of us, there is a bumper harvest in agriculture. That is production and because of agriculture being the anchor of the economy and its linkage to other sectors of the economy, we expect that in future this will go a long way in resuscitating, not just the manufacturing industry but the transport sector as well. I think all of you became aware of the transport sector’s involvement in transporting cotton and maize to markets. That is what we should encourage and those figures are very clear that the economy is growing. I agree with her on issues of corruption.
Hon. Mliswa, thank you very much, I agree again with you that what we need is fiscal discipline but it should be a collective effort and not the responsibility of one person. On the issue of the wage bill, let me repeat, we are taking measures to rationalize the Civil Service in order to achieve savings. But we cannot, by nature of its problem – it is not a mechanical exercise. We have to approach it through two strategies. One is to rationalize to achieve efficiencies and the other is basically to grow the cake. If at present for example, our revenue is $100 and $90 is going towards wages, if we increase our revenue to $1000, $90 as a percentage of $1000 will be manageable. That is the approach that personally, I much prefer.
I have already indicated Mr. Speaker Sir, with respect to prioritisation of our foreign currency and I agree with him that empowerment under the indigenisation law should not be empowerment of individuals but of communities. We should have a broad based empowerment and if one looks at the clarification on the indigenisation policy given by His Excellency …
HON. ADV. CHAMISA: On a point of order Mr. Speaker. I want to thank the Minister for the sterling effort in responding to the questions. But just a clarification – in most of the points, he is saying he is in agreement with Hon. Members, which is okay but we are not expecting you to just be in agreement. We are expecting to hear what you are doing about the agreement. That is the difference. We appreciate you are in agreement but beyond an agreement, what are you doing? We want to hear, if you agree with us that corruption is a problem, this is what Government is doing – one, two, three. Then we go back home and say these are the answers from the Minister. As it is, you are just in agreement and we are now a choir. We do not want to be a choir that is just singing together a chorus that is to no end. We need edification and answers. Thank you Hon. Speaker.