Zimbabwe budget likely to show Mugabe's desperation

By Cris Chinaka

HARARE (Reuters) - Zimbabwe will present its annual budget this week, which analysts expect to contain desperate measures in the wake of economic collapse amid political crisis.

President Robert Mugabe's acting Finance Minister Patrick Chinamasa will unveil the 2009 budget in parliament on Thursday most likely in U.S. dollars because soaring hyper-inflation has left the Zimbabwean dollar virtually worthless.

Analysts say the budget -- coming two months later than usual -- would be both a number-crunching exercise and a confirmation that Zimbabwe has been forced to use foreign currencies after the spectacular collapse of its own currency.

The Zimbabwean dollar currently trades at anything up to 40 trillion to the U.S dollar, despite being re-denominated through the removal of 10 zeroes in August. An average worker earns trillions, but struggles to buy a loaf of bread in the few shops that still accept the local unit.

"The situation is so desperate and I think, outside the usual statements about political enemies, we are going to see some desperate proposals to try to get the economy out of this mess," said John Robertson, an economic consultant.

Besides "dollarisation," Mugabe's government is expected to introduce some new taxes in foreign currency -- including income and capital gains -- to try to boost empty state coffers.

"The simple change of currency is not going to save the economy, but may actually create more problems by getting the whole country, workers across the board, to believe they can get foreign currency without production," Robertson said.

"What is going to save the economy is an acceptance that we are in this mess because of bad policies and bad politics and that we have to change those to have a foundation for recovery."