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Chinamasa budget ‘too ambitious’

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HARARE — The 2014 national budget targets are “too optimistic” and the government could struggle to meet revenue targets because of weakening international mineral prices, analysts said on Friday.

Finance minister Patrick Chinamasa projected that Zimbabwe’s economy would grow by 6,1% in 2014 despite the country’s failure to meet its economic targets this year and worsening macro-economic conditions and a disappearing manufacturing sector.

The $4,4 billion budget, he said, would be anchored on the strong recovery of agriculture and improved performance of the mining and construction sectors, which he said would grow by nine and 11% respectively.

There are expectations of significant earnings from diamonds after Zimbabwe held its first ever diamond auction of nearly 280 000 carats in Belgium which ended on Monday, earning $10,4 million.

“It is obvious that the (Finance) minister premised his budget on (earnings from) mining, but why he would do that when mineral prices are going down elsewhere is baffling,” Chamber of Mines and Zimplats chief executive Alex Mhembere said at a post-budget seminar organised by the Confederation of Zimbabwe Industries.

He later said that the mining industry was still studying the impact of the measures announced by the government.

“There are so many,” he said.

Zimbabwe has eight companies involved in diamond mining in the government-controlled Marange area, with the government holding 50% stakes in seven through the Zimbabwe Mining Development Corporation, while it wholly owns Marange Resources.

In the budget, Chinamasa said the government would charge 10% royalties on gross diamond sales from January 1 and the mines would also pay an additional 2,5% resource depletion levy directly to Treasury, and not to the ZMDC as was the previous case.

Zimbabwe is home to one of the world’s largest diamond fields in the eastern Marange district.

Participants at the Confederation of Zimbabwe Industries seminar noted that the budget provided no incentives for the large industry or financial support, concentrating instead on small-scale enterprises.

“The economy is on the edge,” noted Nestlé Zimbabwe managing director Kumbirai Katsande.

“Zimbabwe is a high cost economy and that needs to be addressed.”

— The Source

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