At a recent flopped post budget meeting in Harare, business said the budget was crafted without the benefit of substantial increases in revenues.

"The Minister failed to address the real issues affecting our economy. He centered on petty issues," said a renowned entrepreneur who prefered anonimity.

"Even granting the 75 million tax-free bonus is useless because firms are not making any meaningful profit hence many cannot even afford to award their workers bonuses," he said.

However, under unclarified reasons, Mumbengegwi was said to have left the venue before the meeting started.

Kingdom Bank analysts say the government will not be able to provide for the increases in expenditure indicated in its budget forecasts unless it accepts the need for a significantly higher budget deficit. The inflation rate outlook is determined by how the government will finance the deficit.

"The budget projections for 2008 are based on the hope of the revival of agriculture ahead of the harvests," said the analysts in a statement.

Economic growth forecast of 4.0 percent next year, while inflation should slow were too optimistic and that projections had become largely meaningless as the figures presented represent over 200 percent increase from 2007 figures.

Zimbabwe's inflation is currently pegged at figures around 14 000 percent. Budget figures have been increasing dramatically over the past eight years whilst supplementary budgets have been put in place every year.

Another businesswoman at the post budget meeting said she expected the Minister to come up with stern measures to curtail the current economic problems.

"I am very disappointed because nothing is making sense to me in the Minister's budget."

"As the country is currently experiencing more problems on top of other ones, Mumbengegwi should have addressed controversial issues," she said.

The inflation rate outlook therefore remains worse. "The challenges of reducing inflation and restoring increased production necessary for economic recovery are enormous, but surmountable," said Mumbengegwi, adding that sanctions were hurting the economy.

Analysts say as a basic and almost unavoidable consequence of all adverse pressures, inflation can be expected to continue rising and this will invalidate most if not all the budget estimates.

"To recover from the current problems, it would seem that government needs to at least permit market forces to determine the basic measure of exchange rate and interest rates."

"The year 2008 promises to be extremely challenging year given we also need to content with the harmonized elections," adds Kingdom Bank analysts.

Investments are expected to be skewed towards non interest bearing assets such as properties, stocks and other inflation hedge assets. In the short to medium term, the mismatch between inflation rate and interest rates is likely to widen.

Though business is not happy with Mumbengegwi, eyes and focus has been shifted to Reserve Bank of Zimbabwe (RBZ) governor, Gideon Gono who is expected to launch a new currency anytime from now.

Budget Highlights

Total bids submissions Z$42 435 trillion;

Total budget expenditure Z$7 840 trillion;

32 percent of budget expenditure allocated to capital expenditure while 68 percent on recurrent expenditure;

Total Revenue expected Z$6 000 trillion;

Budget deficit Z$1 800 trillion;

Expected economic growth 4 percent;

GDP growth in 2007 to be Z$16 000 trillion;

Inflation forecast for December 2008 1 900 percent;

Exchange rate remains at US$1:Z$30,000.00;

Tax free threshold increased from Z$4m to Z$30m effective 01 January 2008;

Non taxable bonus increased to Z$75m effective 01 November 2007;

Fines to be reviewed to cost recovery levels;

ATM and stamp duty on cheques increased to Z$25000 and Z$50000 respectively

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