Zimbabwe projects balanced budget by 2020

ZIMBABWE is projecting a balanced budget in 2020 on the back of fiscal consolidation and rigorous monitoring of the implementation of allocated resources, a 2018 budget strategy paper has shown.

Government has been failing to live within its means, spending more than it generated and forcing it to borrow from the domestic market.

The uncontrolled spending has seen budget deficit as a percentage of GDP rising to 8,7% last year from 1,2% in 2014. Budget deficit as a percentage of GDP is projected to lower to 8,4% this year.

According to the 2018 pre-budget strategy paper, the absence of strong measures targeted at containing expenditures and enhancing revenues would see a further deterioration of the budget deficit beyond 2014.

"Consequently, the 2018 Budget Strategy Paper proposes targeting halving the budget deficit to 4% of GDP, and subsequently move to a balanced budget by 2020," it said.

Treasury said revenue for the fiscal year 2017 was expected to surpass the budget target of $3,7 billion, benefiting largely from the improved economic performance, as well as administrative and policy measures implemented through the 2017 National Budget.

"Beyond 2017, revenues are expected to continue on a sustained upward trajectory, from $4 billion in 2018 to $4,9 billion in 2020," Treasury said.

It said the projected revenues of $4 billion for 2018 "are anchored on the full implementation of ongoing measures aimed at improving administrative efficiencies in tax collection".

"This will be achieved through the use of upgraded and modern Information Communication Technology-based innovative solutions with a view to plug potential revenue leakages," Treasury said.

Expenditure for 2018 is projected at $4,68 billion. Of that, employments costs are projected at $3,2 billion, representing 80% of total anticipated revenues.

"With this high level of employment costs, social service delivery programmes, operations and maintenance as well as the Public Sector Investment Programme will not adequately deliver the desired poverty reduction and development objectives," Treasury said.

It said fundamental challenges facing the economy revolved around low productivity, domestic production levels across sectors, as well as market indiscipline underpinning prevailing low liquidity and foreign exchange levels in the economy.

It said there was the inefficient use of public resources, poor and costly management of public projects across government, parastatals and local authorities.

"Critical for the success of the 2018 National Budget are effective revenue mobilisation, prudent expenditure and debt management to ensure that the Budget provides an effective fiscal stimulus to the economy," Treasury said.

The 2018 National Budget, it said, should focus on restoring fiscal sustainability and discipline through institution of expenditure reduction measures as directed by Cabinet imploring submissions from ministries and departments to contain sectoral specific proposals on cutting budget expenditure costs.

"…the rationalisation of public expenditures presents a further opportunity to curtail non-priority spending, thereby directing additional resources towards growth-enhancing Zim Asset infrastructure expenditures and improving the quality and coverage of public services," Treasury said.

Former Finance minister Tendai Biti (pictured) dismissed the projection of a balanced budget as a wish list.

"Zanu-PF is addicted to fiscal indiscipline and (Finance minister Ignatius) Chombo is entitled to come up with a new budget strategy paper. He would be a fool if he were to adopt such thinking," Biti said.