Zimbabwe's cash-strapped government will spend more money than initially planned this year, mainly on drought relief, sharply widening the budget deficit, Finance Minister Herbert Murerwa said on Tuesday.
The country is mired in its worst economic crisis since independence 25 years ago and is virtually bankrupt after donors withheld funds over policy differences with President Robert Mugabe's government, especially seizures of white-owned farms.
A combination of drought and the land seizures have left the former breadbasket of the region with severe food shortages. The World Food Programme estimates that about 4.3 million Zimbabweans may face hunger in coming months.
Murerwa told parliament, amid murmurs of derision from the opposition Movement for Democratic Change (MDC), that the government needed another 6.6 trillion Zimbabwe dollars ($356.7 million) by December, with food imports a big issue.
"Latest estimates indicate that to December 2005 total drought relief will require 1.4 trillion dollars in support of grain importation ... The challenge of importation has largely been raising the required foreign exchange," he said.
"I therefore propose to finance these additional expenditures from re-allocation of funds ... and additional revenue measures."
Murerwa was not clear on how money would be reallocated, but said the additional spending will push Zimbabwe's budget deficit to 8.7 percent of gross domestic product in calendar 2005.
This compares with his 5 percent deficit forecast when the budget was tabled last November. There is no published outcome for the 2004 shortfall.
The MDC, which blames the government for ruining the once prosperous economy, said Murewa had failed to offer solutions for a crisis that has seen the former British colony endure six years of recession.
"What he has told us is that the government is broke. We view this supplementary budget as nothing but efforts to sanitise the disarray in the government," said MDC spokesman Tapiwa Mashakada.
"It will lead to an expansionary fiscal policy which will undermine what the Governor (of the Reserve Bank of Zimbabwe) has been doing."
The central bank is trying to contain inflation and has repeatedly called for tighter government spending.
Murerwa made no mention of the loan Zimbabwe is seeking from neighbouring South Africa, which media reports have estimated at $1 billion. But he said the government would borrow an additional 1.6 trillion Zimbabwe dollars from the local market.
The country is experiencing an acute shortage of foreign currency which has seen it unable to service its foreign debts and secure regular fuel supplies.
Growth forecasts for 2005 were revised further down to below 2 percent from earlier estimates of 3.5 percent. The economy has contracted by more than 30 percent in the last six years.
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