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Mthuli Ncube's austerity measures pay off

by Staff reporter
11 Dec 2019 at 06:35hrs | Views
THE state of Government finances remains healthy after revenue collections for the nine months to September 2019 surpassed the target at $11,316 billion against expenditure of $10,449 billion, which represented a positive variance of $867,4 million.

This means Government spent less than it collected for the period under review.

According to the latest consolidated statement of financial performance, the revenue for the nine months was driven by taxes on goods and services, which contributed $6,019 billion against a target of $5,071 billion.

The positive state of Government finances, a common feature since November 2018, comes on the back of chastening austerity measures for most of this year, which saw Treasury rationalising public expenditures while also instituting initiatives to boost revenue inflows.

Resultantly, surpluses and trimmed expenditure have allowed Government to fund most of its programmes from non-borrowed funds while limiting expenditure over runs to within 4 percent of gross domestic product (GDP).

"Taxes on income contributed $3,140 billion against a budget of $2,594 billion, intermediate money transfer tax contributed $1,340 billion against a budget of $1,148 billion," the report says. Government has also stopped dependency on borrowing through the Reserve Bank of Zimbabwe (RBZ) overdraft facility and Treasury Bills to fund its programmes outside of the approved budget.

Non-tax revenue recorded a negative variance of 13 percent and much of the variance was on Government fees, fines and licences. Expenditure for the nine months amounted to $10,449 billion against targeted expenses of $9,205 billion, resulting in variance of $1,243 billion.

Salaries and wages took $3,550 billion against target of $3,025 billion. This represented a budget overshoot of 17 percent.

"The variance is due to Cost of Living Adjustment to all members of the public service (including employees of grant-aided institutions), which was not effected during the period under review."

During the period under review, $3,681 billion was spent on capital programmes against a target of $3,132 billion, which resulted in variance of $549 million.  

Government plans to spend $26 billion this year after getting parliamentary approval to spend an additional $10 billion to supplement last year's budget, announced in US dollars before the switch to local currency in February 2019 and subsequent inflation pressures.

Finance and Economic Development Minister Professor Mthuli Ncube last month announced a $63,6 billion budget for next year amid soaring inflation, which is a result of prices tracking the exchange rate dynamics.

Source - chronicle

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