Government urged to maintain fiscal discipline

THE Zimbabwe National Chamber of Commerce (ZNCC) has urged the government to maintain fiscal discipline ahead of presidential and parliamentary elections scheduled for next year, to improve the country’s business confidence rankings.
In its inaugural State of Industry and Commerce Survey 2021, which was launched yesterday, ZNCC said adopting an expansionary stance to meet election demands would be inflationary and worsen the country’s “ease of doing business.”

“Government should maintain fiscal discipline as we enter the election season. This is critical for improving the low business confidence,” said the business member organisation.

“The monetary authorities should extend the tight monetary policy stance to M1 growth (particularly local currency denominated transferable deposits) to reduce resurgent inflationary pressures.

“Limiting the tight monetary policy stance to reserve money growth only will not be sufficient to control inflation,” the Chris Mugaga-led ZNCC said.
It said macroeconomic stability was critical for the attainment of sustained economic growth, full employment, favourable balance of payments position and equity.

This year, Zimbabwe is poised to experience a 7,8 percent growth rate on the back of a successful 2020/21 agricultural season, favourable international commodity prices and improved manufacturing sector capacity utilisation.

However, the Covid-19 induced restrictions, the runaway parallel market exchange rate and resurgent inflationary pressures remain a threat to the envisaged economic growth.

ZNCC said the central bank should expedite interventions aimed at improving the efficiency of the foreign exchange auction market to ensure that there were no arbitrages that could result in inflationary pressures.

“The full tenets of the Dutch auction system should be adopted and preceded by the clearance of the backlog.”
It said momentum in the Covid-19 vaccination campaign towards achieving herd immunity should be maintained to reduce the need for frequent lockdowns, adding that efforts to clear external debt arrears as well as re-engagement with international creditors and financiers should be increased to open up international lines of credit.

“The country is in dire need of patient but cheap capital for recapitalisation across all sectors.”
Further, the organisation said there is a need for stakeholder consultations and impact studies before statutory instruments are introduced to ensure both microeconomic and macroeconomic stability.

It also said the Zimbabwe Anti-Corruption Commission (ZACC) should be capacitated with enough financial resources to fill vacant but critical posts so that it effectively discharges its mandate.
“There is a need to consider giving the commission prosecuting powers for corruption cases as the National Prosecuting Authority is overwhelmed,” ZNCC said.
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