By Tendai Sahondo
Finance and economic development minister, Professor Mthuli Ncube yesterday tabled a $10.89bln supplementary before parliament yesterday as the country continues reel from a spiraling economic downturn.
- Total expenditures of $18.62 bln anticipated against revenues of $14.1
- Employment costs to gobble ZWL$5.56 billion
- $803.6mln budget surplus realised in H1
Presenting the mid-term review and supplementary budget before parliament, Ncube said the cushion is aimed at tackling constraining economic developments that have cropped up in recent months.
“In view of recent economic developments, it has become necessary to update and align the macro-fiscal framework with fiscal and monetary policy pronouncements made by government between January and June 2019.
Resultantly, the Mid-Year Review provides an updated 2019 Fiscal Framework with projected total expenditures of ZWL$18.62 billion, against anticipated revenue collections of ZWL$14.1 billion. The projected expenditures are, inclusive of a proposed supplementary budget of ZWL$10.85 billion,” he said.
Ncube said the projected revenues of ZWL$14.06 billion comprised of tax revenue amounting to ZWL$12.75 billion and non-tax revenues of ZWL$1.312 million. On the expenditure side he said employment costs will gobble ZWL$5.56 billion and capital expenditure will eat up ZWL$7.08 billion. Ncube said the revised 2019 budget framework will now result in a reduced budget deficit of 4% of GDP
The 2019 supplementary budget proposed additional provisions and reforms mainly related to stimulation of production, targeting agriculture, industry and other productive sectors. Food security was also targeted including grain procurement to mitigate the effects of the drought and funding for the 2019/20 summer cropping program. Ncube said $3.2 billion has been set aside for the coming agricultural sector.
Reviewing fiscal performance in the first half of the year, Ncube said a $803.6mln budget surplus was realised in the period under review with $196mln achieved in the first quarter alone. This is the first time that the current account has registered a surplus in the first half of the year which Ncube attributed to a new a disciplined and sustainable regime. Monthly revenue collections for the first six months amounted to ZWL$5.0 billion, against expenditures of ZWL$4.2 billion. Domestic debt declined from ZWL$9.5 to ZWL$8.8 billion a reduction of 7.4% in the period under review.
Inflationary pressures however reared their ugly head in the period under review, averaging 12.4% in H1 against 6.4% in the same period last year.
Ncube said comprehensive currency reforms are being implemented to restore independent monetary policies and to create further scope for enhanced competitiveness of exports and import substitution.
In order to build a track record of sound economic policies, the minister said government has since signed off on a Staff Monitored Program with the International Monetary Fund to run from March 2019 to March 2020.
Given substantial headwinds including damages caused by a major drought and Cyclone Idai, Ncube admitted that the initially projected GDP growth is likely unattainable.