Harare: The 2012 National Budget has been thrown off the rails following indications by Mines and Mining Development minister Obert Mpofu that diamond revenue might not meet the projected target of $600 million. Mpofu said this was a result of sanctions on the Zimbabwe Mining Development Company, a parastatal heavily involved in the mining of the precious mineral. The Finance ministry had forecast diamond revenue to rise to $600 million this year after it brought in $166 million last year. The budget was initially pegged at $3,4 billion before it was revised upwards to $4 billion to accommodate diamond revenues. Mpofu said the ministry had initially set a $54 million monthly target that would have been achieved had the buyers not become jittery. The continued imposition of illegal sanctions on some of the diamond producers is hampering fair trade and this may lower the earnings, Mpofu told delegates at the Chamber of Mines of Zimbabwe annual general meeting last week. But Mpofu said Zimbabwe would produce more than 12,1 million carats of gold this year, well beyond the MTP 2015 target. Diamond production rose 3,4% last year. He said people who were benefiting from other minerals were the ones pushing for sanctions on the country. Canada has got profitable gold mines in this country and Australia has an interest in Zimplats, he said. In his monthly state of the economy address in March, Finance Minister Tendai Biti said actual revenue collections for January and February 2012 amounted to $488,24 million, against a target of $549,5 million. This implies a cumulative deficit of $61,24 million, largely emanating from under-performance by diamond revenues during the period under review. Mpofu also said the crafting of the Zimbabwe Diamond Policy was progressing well. The policy seeks to ensure the contribution of diamond revenue to the economy. He noted that Marange Resources had contributed more than what all the mining companies had brought into the revenue coffers in the past 10 years. "Remember its not that we never had diamonds in this country, Murowa and River Ranch have always been there but their contribution to the fiscus was never meaningful", he said. Mpofu said the depressed revenue inflows highlighted the need for governments intervention in the mining sector. "Thats why we are insisting on value addition because there are other predators, like sanctions, which have to be circumvented", he said. As a result of the sanctions, Zimbabwe has had to make do with sales to India.
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Zimbabwe: Budget off the rails
Date:16 May 2012