By Fungayi Chimbindi
Finance Minister Mthuli Ncube has revealed that the Command Agriculture, among other subsidy programmes, has largely contributed to budget deficit as many of the farmers who benefited were defaulting.
The programme is a brainchild of President Emmerson Mnangagwa and was introduced when he was still the country’s vice president.
Ncube has proposed to cut agricultural subsidies after expenditure ballooned to $1,1 billion by August 2018 against the budget target of $401 million.
In his 2019 budget presentation to Parliament on Thursday, Ncube said the spending on agriculture was only exacerbated by defaulters.
“Expenditure on agriculture, which reached $1.1 billion as at August 2018, against an annual Budget target of US$401 million, has been one of the major drivers of the budget deficit.
“The situation has been compounded by high default rates by beneficiaries of various Government programmes,” he said.
Ncube said the government was reviewing its financial model as its current spending levels were having an adverse effect on the economy.
“In view of the implications of the current agriculture financing model on public finances and macro-economic stability, government is reviewing the financing mechanism with a view of sharing the burden between government and the private sector,” he said.
Ncube said that agricultural support would now be confined to vulnerable households, extension services, research and development, mechanisation, dams and irrigation development.
The finance minister said for 2019/20 season, government will also set aside resources to the tune of $130 million for the vulnerable segment of the population with finances guided by a “vulnerability criteria.”
The ruling ZANU PF began issuing significant amounts of treasury bills in the run-up to the 2018 harmonised elections to boost its Command Agriculture programme, which worsened the national deficit.
Ncube said although treasury bills issued were private debt, the high rate of defaulters under the Command Agriculture programme essentially meant that it had become government’s burden.
“While on the face of it, the [treasury bills] issued towards Command Agriculture are a private debt, however, in view of the high default rate by farmers under Command Agriculture, it effectively means that it is government expenditure,” he said.
Meanwhile,Command agriculture – a major, private-sector-backed subsidy programme implemented by the gorvenment, has been hailed as a massive success, especially following the huge maize harvest reaped in 2017.
Farmers who are defaulting are the ones spoiling the beauty of the programme.