Zimbabwe implements public spending austerity

28 July 2011

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28 July 2011 | Angeline Albert

Plans have been announced to restrict the Zimbabwean government’s spending on foreign travel as part of a major cost-cutting drive.

Finance minister Tendai Biti announced his cost control strategy to parliament this week when he presented the country’s 2011mid-year fiscal policy review.

Biti said that in the first half of 2011, the government’s total expenditure was US$1.14 billion (£697 million), including US$29.7 million (£18.17 million) on foreign travel. However, cost “overruns” on foreign travel contributed to the government exceeding its US$991 million (£606 million) spending target for the period.

“Foreign travel expenditure remains disproportionately high in comparison to other budget items, including priority capital projects,” he said.

The minister also plans to drive efficiencies in the purchase of vehicles and the cost of training public sector staff outside the country.

“While we are on course to meet our revenue targets, it is fair to say that a number of structural challenges remain arresting our economy,” he said. “At the epicentre of these challenges is the critical failure to appreciate that we can only spend that which we have. Containing and managing wastage and leakages in government expenditure together with reprioritising and enhancing efficiencies of public expenditures are, therefore, critical.”

Central and local government’s debt to suppliers at the end of June 2011 amounted to US$87.7 million (£53.6 million) and Biti said resources will be required to pay it. “Failure to clear these arrears will constrain service providers’ operations, whose services are critical for sustenance of the current economic recovery momentum.”

But despite cost cutting in some areas, the government plans to increase spending on infrastructure. The procurement of road rehabilitation equipment, which is estimated to cost US$53 million (£32 million), will be protected.

The report highlighted that inflation in Zimbabwe had been the lowest when compared to neighbouring southern Africa states since February – although the country did abandon its native currency in 2009 due to hyperinflation.

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