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Tendai Biti sticks to cash-budgeting as inflows remain critical

by Agencies
28 May 2013 at 03:17hrs | Views
Zimbabwe's minstry of finance will continue cash- budgeting as revenue inflows remain severely depressed due to poor economic performance, a senior government official said Monday.

Acting permanent secretary of the Ministry of Finance Judith Madzorera said the government was collecting revenue merely enough for salaries of government workers, leaving capital and other important projects with very little funding.

Zimbabwe adopted cash-budgeting in 2009 when it dumped the Zimbabwe dollar which had been rendered worthless by hyperinflation and adopted the use of multiple currencies.

Since then, the liquidity situation in the country has remained critical as lines of credit and foreign investment remain low.

Madzorera said the government was collecting on average $290 million per month against civil service wage bill of $209 million.

"What is affecting us is the cyclical nature of our revenue inflows. We are depending on monthly inflows of revenue which on average are between $250 million and $290 million, against employment costs of $209 million," she said.

She said the country's huge debt overhang of more than $10 billion was also making it difficult for the country to attract foreign capital to boost local financial resources.

Madzorera was speaking before a portfolio committee of parliament on the budget outturn for 2012.

She said the country missed its budget target for 2012 mainly due to underperformance of diamond revenue which was expected to rake in $239 million but ended up bringing in only $44 million.

As a result, the country raised $3.5 billion. Zimbabwe targets to raise $3.8 billion in 2013.

Source - Agencies