By E Njega
I have been doing a bit of moving around and observing things as well as going through latest statistics on the economy. Most of the indicators show an economy facing stress from nearly every angle.
It does not help that the government continues to deny the obvious and worse still is implementing adverse economic policies which are destroying the private sector. This trend has been on over the last five years. Most of the economic sectors have fallen victim to such ill thought out policies. Even when they are eventually reversed the impact lingers on for long.
The recent sensational announcement by the president about stopping new projects just shows how chaotic the policy environment is. This is a political declaration with little to do with the economy.
The president has over the last five years launched many politically motivated projects which have indebted the country without any meaningful economic returns. Even if such were to be completed, there is little to be gained.
Besides how do you stop projects whose budgeting process has just completed. What law provides for such a declaration? The best time to do that is long gone. Budget making is a reserve of parliament not presidential declarations.
Considering the fact that the private sector is deteriorating, any attempt at reducing government spending haphazardly will slow down the economy further.
The government should tame its spending by developing a budget that reflects the economic realities of the day. It needs to tighten its belt and live within its ever emaciated means. The days of debt driven growth are gone. Any further incremental borrowing will come at a very high economic price.
Most importantly the government needs to cede the role of growing the economy to the private sector. This means reversing all the nonsensical anti-business policies implemented over the past five years. These should be replaced with incentives and policies that facilitate the private sector to operate optimally.
It also needs to stabilise the policy environment as the endless uncertainties are scaring away investors. There is no easy way out of the current economic mess. Simplistic roadside declarations will only make things worse. You also cannot tax your way out of an economic crisis. The more you postpone hard decisions, the harder it will be to forestall an economic crisis which is knocking furiously at the door.