Economist Eddie Cross has claimed that Zimbabwe incurred a massive deficit during Robert Mugabe’s reign, and money was printed to cover the shortfall.
The former opposition MDC Member of Parliament for Bulawayo South said Zimbabwe’s fiscal deficit was 40% of the budget, prompting Mugabe’s administration to continue printing money.
According to Investopedia, a deficit occurs when expenses exceed revenues, imports exceed exports, or liabilities exceed assets in a particular year. Governments and businesses sometimes run deficits deliberately, to stimulate an economy during a recession or to foster future growth.
Cross (82) claimed that after defeating MDC-T leader Morgan Tsvangirai in the 2013 elections at the conclusion of the four-year inclusive government, Mugabe regained total control of the government and ran up a crippling economic deficit.
Addressing a Chief Executive Officers Roundtable meeting in Harare last week, Cross said:
By 2017, the fiscal deficit was 40% of the budget, how do you run a country like that? We had US$23 million in our bank accounts which we called United States dollars but it wasn’t United States dollars. It was there because Mugabe was printing money to cover the deficit. We were headed for the rocks again and that was when Mnangagwa decided the change of government was necessary, and on the 17th of November, the transition took place. I was actually still in Parliament. I sat at the Harare International Conference Centre waiting to impeach the old man, and then in walked a messenger with Mugabe’s letter of resignation.
Zimbabwe’s fiscal deficit has been increasing due to reduced tax revenue, high government spending, and an increase in debt repayment obligations. The country has been struggling to address the deficit and stabilize its economy.
Economists have been urging the government to implement the following measure to address the fiscal deficit in Zimbabwe:
i). Increase revenue (taxes, better administration)
ii). Reduce government spending (austerity measures)
iii). Diversify economy
iv). Improve financial management & reduce corruption
v). Encourage foreign investment/trade
vi). Implement structural reforms
vii). Seek international aid, if needed.
Finance Minister Mthuli Ncube claims that Zimbabwe has recorded “cash-based “surpluses since 2018 when Mnangagwa’s government took over.