NEW Finance Minister Patrick Chinamasa is best remembered by the business community for formally dollarising Zimbabwe’s economy on January 31, 2009 at a time the country’s economy was in an unprecedented crisis.
Then, he was in an acting capacity. The former justice minister, a lawyer by profession, was on Tuesday appointed to one of the most powerful and influential ministries, succeeding Tendai Biti of the Movement for Democratic Change (MDC-T).
Chinamasa will be deputised by Samuel Undenge who previously was the deputy minister of economic planning.
When he announced the dollarisation of the economy then, inflation was estimated to be over two billion.
Questions are being asked if he and others appointed to ministries are equal to the task at hand.
Is he being rewarded for his loyalty and will he ensure that the inflation rate remains stable? Is President Robert Mugabe trying to unite his party by rewarding loyalty without considering the best interests of the country? Will he be able to mobilise foreign assistance despite sanctions from western countries?
How will he handle a national budget in which 70 percent is spent on salaries? Will Chinamasa be able to ensure that the business environment is not overly influenced by perceptions on political developments?
Confederation of Zimbabwe Industries (CZI) president Charles Msipa said Chinamasa and other ministers appointed to economic ministries had the confidence of the business sector.
“As CZI, we are confident the minister, together with Mike Bimha (Industry and Commerce) whom we work with often, would come up with policies that will improve capacity utilisation,” said Msipa.
“Chinamasa can deliver and Bimha is a friend of the industry and we are very comfortable with their appointments. There will be a smooth take over as these two are not strangers to these ministries with Bimha having been the deputy,” he said.
Msipa said the new government should come up with policies that balance imports and local production to revive industry.
According to the CZI, the manufacturing sector is operating at 44,2 percent capacity and the economy is expected to grow by four percent this year.
The most daunting challenge Chinamasa will face is to maintain economic stability and growth in a dollarised economy that had shrunk by 60 percent between 2000 and December 2008.
Zimbabwe National Chamber of Commerce president, Hlanganiso Matangaidze, said ministers appointed to economic related ministries should take a cue from the President’s inauguration speech.
“The ministers have capacity to deliver and like the President said they should listen to the people’s needs as well as (those of) business, industry and farmers,” he said.
Some analysts yesterday said there was need to sufficiently fund all sectors involved in the reconstruction and expansion programmes, from private sector to government.
Economist, Brains Muchemwa, said liquidity challenges continue to pose the greatest downside risks in the economy.
Substantial capital injection into the economy, coupled with investor friendly policies, would be the necessary starting point for sustainable growth.
“The key focus should be on coming up with policies and incentives that ensure that the economy bolsters its ability to generate liquidity internally, whilst external sources of liquidity should also be pursued vigorously,” he said.
Biti presented a US$3,8 billion national budget for the current year, which he said was demand driven and projected the economy to grow by five percent next year, assuming a normal rain season, firming of international commodity prices and implementation of reforms.
Of the US$3,8 billion, about US$2,6 billion would go towards the employment bill and the government would be left with nothing for capital expenditure and other costs.
Government officials hope the United States and the European Union would remove the remaining “targeted sanctions” against the elite in ZANU-PF and State-owned businesses, with Belgium already calling for this in respect of State-owned diamond mining companies.
The World Bank is also keen to see the sanctions lifted in order to proceed with the urgently needed debt relief programmes for the country. An International Monetary Fund team is expected to visit Zimbabwe next month.
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