By Daniel Chigundu
Finance and Economic Development Minister Patrick Chinamasa says he is against the concept of “eat what you kill” because the country is not killing enough for itself.
The concept of eat what you kill was popularised by former Finance Minister Tendai Biti during the time of the inclusive government.
According to Biti, the concept was about living within the country’s means as a way of discouraging and managing the country’s borrowing appetite.
Responding to a suggestion from Honourable Thokozani Khupe that he should adopt the concept, Minister Chinamasa told the National Assembly that there is nothing wrong with deficit budgeting as long as the borrowed funds are used for the right purposes.
“Hon. Khupe, to be honest I do not share your sentiments …that you must only eat what you kill. What is the purpose of an overdraft? At household level, even at company level they operate an overdraft, and it is because they are not able to kill sufficient in order to operate.
“So, what is important is firstly to keep the proportion of debt to your revenues. What is also important is the use to which you put that money and I am saying with respect to a lot of the borrowing that we have done through TBs, we have put the bulk of it towards infrastructure,” he said.
Owing to its failure to generate enough revenue to cover its various expenditures, government has largely been relying on Treasury Bills as it has no capacity to borrow from international financing institutions due to debt over-hang.
However, economists have castigated government domestic borrowing arguing that it’s crowding out local businesses that also need the same funds for capitalisation.
According to Chinamasa all the TBs he has used in borrowing have been to finance important infrastructure projects and to save certain strategic companies and institutions that were on the verge of collapsing.
“…Tokwe-Mukorsi was through TBs, Gwayi-Shangani is through TBs, Marowa-Nyathi, and Causeway Dam is through TBs, the cleaning up of the balance sheet of commercial banks which were on the verge of collapse as a financial system was done through TBs.
“The takeover of the Reserve Bank debt of around $1.5 billion, we had to take it over in order to liquidate or to liquefy the Central Bank because it was insolvent at that time. Now, those are policies that we took.
“So, we need to understand the use to which the money is being put. If you borrow, what are you using it for? If you use it for consumption, then you are spelling disaster,” he said.