Treasury records $5.39 billion deficit in July

Government incurred a deficit of $549.95 million in the seven months to July, missing a targeted surplus of $2.02 billion after higher expenses mainly due to the payment of Covid-19 risk allowances to its employees and capital and salary grants, weighed on performance.
 
Latest figures from the Consolidated Statement of Financial Performance of the Consolidated Revenue Fund, total income inclusive of tax and non-tax revenue was 14% ahead of budget at $45.92 billion. Tax revenue was at $44.84 billion against a target of $39.59 billion while non-tax revenue was $1.03 billion boosted by the sale of goods and services at $831.87 million.
 
Specifically, for the month of July, Treasury incurred a deficit of $5.39 billion against a targeted surplus of $7.75 billion. Tax revenues performed below budget due to the slowdown in economic activity following the Covid-19 induced lockdowns. Total revenue collection amounted to $12.11 billion against a target of $13.02 billion. Taxes on income surpassed the set budget at $3.21 billion (target: $2.11 billion) with individuals contributing the most. However, taxes on good and services did not perform as expected at $8.67 billion against a target of $10.83 billion mainly due to less trading activities on the market and revision of tax targets in the mid- year budget review.  Because of the continued closure of borders excise duty underperformed set targets by $120.3 million while tax on financial and capital transactions a negative variance of $353.158 million.
 
Expenditure for July was at $17.506 billion against a target of $ 5.273 billion resulting in a variance of $12.23billion (232%). This is mainly due to payment of risk allowance to front-line health workers as well as Covid allowances for all civil servants and pensioners. Employee wages cost $7.85 billion against a target of $1.19 billion giving a variance of $6.65 billion, (557%).
 
Expenses on use of goods and services amounted to $1.12 billion against a target of $1.05 billion due to an increase in institutional provisions, training expenses and domestic travel expenses. Grants also contributed a major part of expenses at $4.77 billion against a target of $1.60 billion. The major ones being capital grant of ZWL$ 2.920 billion and salary grant of ZWL$ 1.547 million to grant aided institutions.

Interest and debt repayments also came in lower than the budgeted figure as they were 80% lower at $13 million against a target of $62 million. All the payments were interests on domestic debt and nothing was put towards the foreign debt. Subsidies were, however, 90% above that target standing at $451 million against a budgeted figure of $45 million due to inflation and late adjustment of service fees that halved the subsidy amount.
 
Finance Minister Mthuli Ncube said Treasury continued with efforts to contain expenditure. "We are keeping a tight lid on expenditure and to date we have not sought recourse at the Central Bank overdraft. We are only issuing TBs for budget purposes only while the public sector wage bill is now below 50% of total revenues from 92% in 2017."
 
Meanwhile the Public Finance Management Enhancement Project is nearing its completion with the Ministry of Finance and its donor partners expected to complete all outstanding activities by December 31, 2020. The project, which cost US$20 million, aims to improve financial reporting, internal controls, fiscal transparency and accountability in government finances in Zimbabwe. The project was accompanied by a WBG grant to finance supervision over the life of the four-year project of $0.8 million.