FINANCE Minister Tendai Biti has said the government is experiencing a serious cash squeeze and failing to meet its commitments including a US$700,000 hotel bill for Members of Parliament.
Biti warned legislators Thursday that the country must expect increased austerity as the 2012 budget has been thrown off-course due to a combination of unplanned expenditure and underperforming diamond revenues.
“There will be austerity, there will be living within our means, there will be expenditure retrenchment and there will be selling of silverware, there will be reform of the mining sector, there will be reform of the supply side of the economy,” Biti said.
“We have even been unable to meet Government salaries. We have just struggled to meet Government salaries.
“Even this august House, we owe hotel bills in respect of MPs accommodation in excess of US$700,000 because of the non-performance of the budget.”
Biti said between January and May 2012, the government had failed to meet revenue targets by almost US$200 million adding “illegal” government programmes such as the recruitment of some 4,600 soldiers had not helped matters.
The army was now being forced to divert funds meant for NSSA and ZIMRA to pay for the extra soldiers.
Biti said he would also revise downwards his US$4billion 2012 budget and blamed underperforming diamond revenues.
“I also want to tell you Hon. Speaker, that the main reason why we have failed to meet our revenue target is the gross under performance of diamond revenue,” he said.
“Between January and May, we have only received US$30 million, when we were supposed to receive about US$240 million. So as a result of that, we are going to revise the budget downward.
“So to summarise, the economy, in the first five months of the year, has been in comatose and we have to take drastic measures.”
Biti said the key agricultural sector has also been hit by drought, seriously reducing the country’s maize output while tobacco sales had also performed below expectations.
“The drought we had has resulted in us losing 33% of our projected maize output. So, where we were targeting around 1.4 million metric tonnes, we are going to harvest about 900 000 metric tonnes,” he said.
“So, agricultural growth this year will be about -5%. As for tobacco, our target was 150 million kgs but that have been reduced to 130 million kgs.
“Therefore as a result of the shrinkage in agricultural output, we are also going to revise downward our GDP figures.”