THE LEFTIST ruling party, Zanu PF should seriously consider moving to centre right of the political spectrum for about three years in order to deal decisively with the issues of budget deficit, debt repayment and expenditure control.
Zanu PF should take this action because the current situation regarding the budget deficit, debt levels and expenditure is not sustainable. The Finance and Economic Development minister Patrick Chinamasa stated that as at December 31 2012, Zimbabwe’s external public debt stood at $6,077 billion, which is 49% of gross domestic product and increasing due to arrears.
Debt arrears have grown to $4,72 billion or 78% of total debt stock. Meanwhile, the minister was reported as saying the budget deficit is projected to be $100 million owing to less-than-expected revenue inflows.
Zanu PF enjoys wide support on the back of many promises made during the elections. In order for the promises to be fulfilled, the party has to redouble its efforts in addressing the deteriorating economic situation, mindful of the economic sanctions that are dragging the country down.
Addressing the economic challenges does not need the government to abandon the indigenisation and empowerment programme. Rather, it needs government to draw from those centre right economic principles that promote a balance of social development and addressing debt management, expenditure control and revenue generation.
Debt management, specifically borrowing, and expenditure control will be aimed at reducing both the government debt and deficit.
Revenue generation will ensure the government earns enough money to finance its public and administrative activities. This will mean a reduction and in some cases elimination of non-essential social services that Zimbabweans have enjoyed and had become accustomed to and those that Zanu PF promised. Zanu PF should review its expenditure with a view of reducing or marketising all non-core social services.
The three-year period (2014-2017) of rationalising these programmes will allow the establishment of strong economic fundamentals. By that time, a significant amount of money saved from non core social services would have been reinvested in other critical areas to strengthen indigenous-led economic growth.
Even then, when the government rationalises its spending, it should still make a thorough review of services and programmes to determine the core social services and programmes that justify continued public financing. For instance, subsidies for products such as fuel can be eliminated and provided at full cost while necessary subsidies for vulnerable groups such as education and health continue. Going through the rationalisation process will require making necessary hard choices.
As a leftist party, Zanu PF is generally expected to increase the government spending on social services while the right of centre parties are expected to generally reduce it and have balanced budgets. By cutting back on social services, Zanu PF will be abandoning its traditional ideological position, but that is okay, because it is a temporary move. After all, no ideology draws exclusively within its own principles. Capitalism, for instance, endures, because it draws from socialism’s redistributive principles to cushion people from its effects.
Margit Tavits and Natalia Letki note, in their paper titled, When Left is Right: Party Ideology and Policy in Post-Communist Europe (2009), that issues such as unemployment, low economic growth and low revenues forced both left and right-wing parties in East Asia, Latin America and Eastern Europe to disregard the ideological left-right leanings to purse radical economic reforms. Zimbabwe might consider temporarily adopting a similar approach as a means to achieving a healthy economic growth and public finances.
Tavits and Letki actually show that two previous communist parties in Hungary and Poland embraced radical right-wing economic reforms in order to show commitment to and build a strong market economy.
The Hungarian Socialist Party and Social Democracy of Polish Republic actually managed to maintain and increase their party membership despite the harsh economic reforms they implemented during their governance tenure. To some extent, the people supported the tough economic reforms because they wanted a move from a command market to a market economy.
Likewise, if the government adopts this approach, Zimbabweans are likely to support its efforts, especially if there is a perception that expenditure controls or revenue generation mechanisms are enforced seriously. In addition, there has to be a clear demonstration by all to live by standards set as necessary to establish a sustainable economy. Currently, the government and future generations are losing a significant amount of money to accumulating debt arrears and forgone revenues that could be earned were the economy operating at optimum.
That money could be invested in infrastructure improvement, bolstering the social safety net, etc. Also, the huge debt load and low economic growth renders the country less creditworthy, and therefore making it difficult to access funds to support Zim Asset, the national socioeconomic blueprint.