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Mthuli Ncube redirects 2020 budget allocations to fight Covid-19

by Staff reporter
31 Mar 2020 at 07:56hrs | Views
GOVERNMENT has availed $500 million and approved recruitment of 4 200 health workers as part of a wider Covid-19 (coronavirus) mitigation measures, that include redirecting the 2020 budget expenditure and channelling all proceeds from the 2 percent tax towards strengthening the national response strategy against the pandemic.

The country has joined hands with the rest of the global community in scaling protective measures amid the sharp rise in new infections and death toll worldwide, since Covid-19 broke out in mainland China last December and has spread across all continents.

In a Press statement yesterday on economic mitigatory measures to contain the impact of Covid-19 in the country, Finance and Economic Development Minister, Professor Mthuli Ncube, said Covid-19 was spreading fast to the rest of the world, placing unprecedented pressure on humanitarian services as well as economic activities. Zimbabwe has already started feeling the impact of economic disruption while seven positive cases have been recorded, one of them fatal.

This has prompted Government to take bold interventions covering both prevention and support to the productive sectors, said the minister.

"Treasury has since availed over ZWL$500 million to fight against Covid-19, and is ready to attend to further requests on this issue," said Prof Ncube. In order to augment resources required to alleviate the impact of the pandemic, Treasury has also proposed expenditure re-prioritisation or redirecting capital expenditure.

"Treasury is redirecting capital expenditure allocations under the 2020 National Budget towards health-related expenditures including water supply and sanitation programmes. However, Government will continue implementation of selected priority programmes and projects to sustain the economy and these include roads and dam construction, irrigation and water and sanitation projects, among others," said the minister.

"The two percent Intermediated Money Transfer Tax (IMTT), which is currently ring-fenced for social protection and capital development projects and hence, will ordinarily be channelled towards Covid-19 related mitigatory expenditures.

"Additional resources will constitute some cuts from respective ministry allocations/budgets and details are being worked out. Treasury has issued a Circular of 20 March 2020 instructing line ministries to identify areas for cuts and areas for redirecting expenditures."

Prof Ncube said a large part of resources will be required and hence Treasury was working closely with the Central Bank in mobilising the requisite resources from all possible sources. "During the initial stages, Treasury availed US$2 million for urgent and immediate health-related imports and will continue to mobilise and ring-fence the necessary foreign currency required for additional imports for the short to medium term," said Prof Ncube.

"Resources earmarked for mitigating the Covid-19 pandemic are being ring fenced to ensure achievement of planned activities. Treasury has directed the utilisation of the existing National Disasters Accounts to serve the purpose of this crisis."

Regarding the hiring of additional medical staff, Prof Ncube said Treasury has also concurred to the unfreezing of over 4 000 health sector posts and creation of an additional 200 medical posts with a view of scaling the response to the Covid-19 pandemic. While acknowledging that vulnerable groups were the most exposed under Covid-19 crisis, the minister said resources have been harnessed to cover one million vulnerable households under a Cash Transfer programme whose payment will commence immediately. These would be identified through the Social Welfare Department but exact figures have not been disclosed.

Prof Ncube said demand and supply shocks spell economic doom for the economy, which calls for a mixture of temporary short-term relief measures for the productive sectors, covering at least three months.

"The measures should also balance the required support to productive sectors and the necessity for enhancing revenue to meet the various requirements during these difficult times," he said.

Accordingly, in addition to the fiscal measures, Prof Ncube directed Zimra to expedite processes on refunds to businesses and requests for extension of the time period within which tax is payable without accruing interest and penalties for companies that shall experience Covid-19 related cash flow challenges. He noted that delays in the processing of VAT Refunds continues to affect business cash flows and, in some instances, compelling business to contract expensive short-term funding. In this regard, the minister said Zimra was working on a programme to expedite processing of VAT Refunds from the statutorily prescribed 60 days.

Further, Prof Ncube announced suspension of duty on Covid-19 essential goods such as drugs and equipment as incentives to buttress operations of the health sector. Under this initiative, the business community has mobilised substantial financial and logistical resources to assist all Zimbabweans afflicted and affected by the pandemic.

To date, Government has acknowledged support and pledges from the following development partners: the United Kingdom, China, United States of America, Global Fund, the European Union, Global Financing Facility — World Bank and the Chinese Foundation. As the deadly virus continues to spread, Prof Ncube said Government will remain alert to further developments on this risk and will continue to explore all necessary measures to mitigate the impact for the good and safety of the nation.

Source - chroncile

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