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Economists slam Mthuli Ncube's budget
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Economists have sharply criticised Finance Minister Mthuli Ncube's 2025 mid-term budget and economic review, accusing the government of failing to deliver the structural reforms needed to address Zimbabwe's persistent economic challenges. Despite a forecasted 6% GDP growth, analysts argue that the budget falls short of tackling the country's most pressing issues, leaving key sectors such as mining, retail, and manufacturing under-addressed.
The mid-term budget presented an optimistic outlook, with the Treasury celebrating a rebased Gross Domestic Product (GDP) of US$45.7 billion and a Gross National Income (GNI) surpassing US$3,000, positioning Zimbabwe as a middle-income nation. However, economists warn that these headline figures mask the true economic realities.
The Zimbabwe National Statistics Agency (ZimStat) released its 2023–2024 GDP report in June, revealing a significant gap between nominal growth and real economic performance. While GDP at market prices rose nearly 3%, real growth was revised down to a modest 1.7%—well below expectations and a stark indication that the economy remains far from achieving meaningful progress.
The gap was further widened by the April 2024 currency overhaul, in which the Zimbabwe Gold (ZiG) replaced the Zimbabwe dollar, inflating nominal values without addressing the country's structural economic weaknesses. This, critics say, gives the false impression of economic prosperity, obscuring the need for serious structural reforms.
IH Securities, a financial services firm, noted that the review primarily served as a summary of developments rather than offering tangible policy changes. "This leads us to believe that the status quo of high taxation and regulatory oversight will persist," the firm said in a post-budget analysis. The review, according to IH Securities, lacks the bold steps required to create sustainable economic growth, including real fiscal reforms.
Economist Itai Zimunya expressed frustration with the government's modest growth targets, stressing that Zimbabwe's reliance on mining and agriculture should spur more ambitious goals. "We cannot celebrate 6% GDP growth when poverty and unemployment are still widespread," Zimunya told The Standard. He called for double-digit growth targets over the next several years, aiming for a US$100 billion economy.
While acknowledging positive aspects of the review, such as tax reforms aimed at easing business compliance and initiatives to formalize the informal sector, Zimunya emphasised that the government needs to follow through with strong implementation. He also criticised ongoing fiscal indiscipline, pointing to the Auditor-General's 2024 report, which highlighted systemic abuse of procurement processes and poor accountability across ministries.
He also flagged contradictions in the government's policies, such as the apparent preference for importing luxury vehicles despite claims of supporting local industries like Deven Engineering and Willowvale Motor Industries, which remain underutilised. "You can't claim to support local industry while importing luxury vehicles from South Africa," Zimunya said.
Debt remains another major concern. Despite promises to rein in expenditure, the government added US$640 million to the national debt in the first quarter of 2025, pushing the official debt to US$21.53 billion. However, major creditors, such as the African Export-Import Bank, have indicated that the actual debt figure could be as high as US$24 billion, further raising alarms over fiscal mismanagement.
Jephias Makiwa, an economist with the Zimbabwe National Chamber of Commerce, noted that the budget review largely overlooked the deteriorating conditions in key sectors such as retail and wholesale. "There was no mention of regulatory relief for retail, one of the most informalised and labour-intensive sectors," Makiwa said. Many businesses in retail face tight margins and regulatory burdens, forcing many to downsize or close entirely.
He also criticised the slow pace of budget execution, noting that only 35% of the annual budget had been disbursed to ministries by mid-year, with wages consuming 46.3% of total spending while just 24.1% was allocated to capital development.
Zimbabwe's shrinking formal sector and narrowing tax base also remain key challenges. Makiwa pointed out that only 24% of businesses are formally registered, meaning a small group of compliant firms shoulders the tax burden. "That's not sustainable," he said.
Economist Chenayimoyo Mutambasere also raised concerns over Zimbabwe's ongoing dependence on exporting raw commodities, particularly gold, platinum, and diamonds. "Without serious beneficiation policies, the government will continue to overtax consumers instead of expanding the fiscal base through industrialisation," she said.
Mutambasere also flagged the country's rising reliance on essential imports, including fuel and food. "Imports of diesel, maize, and wheat have surged dramatically in 2024, reflecting a growing energy dependence and a food security crisis following a poor agricultural season," she explained.
In summary, while the 2025 mid-term budget included some positive proposals, including moves to ease the cost of doing business and efforts to formalise the informal sector, economists argue that it fails to address the fundamental structural weaknesses that continue to hold back Zimbabwe's economy. With persistent challenges in key sectors, high debt levels, and a lack of bold reforms, critics have labelled the review as little more than "paper growth," offering little in the way of real economic progress.
The mid-term budget presented an optimistic outlook, with the Treasury celebrating a rebased Gross Domestic Product (GDP) of US$45.7 billion and a Gross National Income (GNI) surpassing US$3,000, positioning Zimbabwe as a middle-income nation. However, economists warn that these headline figures mask the true economic realities.
The Zimbabwe National Statistics Agency (ZimStat) released its 2023–2024 GDP report in June, revealing a significant gap between nominal growth and real economic performance. While GDP at market prices rose nearly 3%, real growth was revised down to a modest 1.7%—well below expectations and a stark indication that the economy remains far from achieving meaningful progress.
The gap was further widened by the April 2024 currency overhaul, in which the Zimbabwe Gold (ZiG) replaced the Zimbabwe dollar, inflating nominal values without addressing the country's structural economic weaknesses. This, critics say, gives the false impression of economic prosperity, obscuring the need for serious structural reforms.
IH Securities, a financial services firm, noted that the review primarily served as a summary of developments rather than offering tangible policy changes. "This leads us to believe that the status quo of high taxation and regulatory oversight will persist," the firm said in a post-budget analysis. The review, according to IH Securities, lacks the bold steps required to create sustainable economic growth, including real fiscal reforms.
Economist Itai Zimunya expressed frustration with the government's modest growth targets, stressing that Zimbabwe's reliance on mining and agriculture should spur more ambitious goals. "We cannot celebrate 6% GDP growth when poverty and unemployment are still widespread," Zimunya told The Standard. He called for double-digit growth targets over the next several years, aiming for a US$100 billion economy.
While acknowledging positive aspects of the review, such as tax reforms aimed at easing business compliance and initiatives to formalize the informal sector, Zimunya emphasised that the government needs to follow through with strong implementation. He also criticised ongoing fiscal indiscipline, pointing to the Auditor-General's 2024 report, which highlighted systemic abuse of procurement processes and poor accountability across ministries.
He also flagged contradictions in the government's policies, such as the apparent preference for importing luxury vehicles despite claims of supporting local industries like Deven Engineering and Willowvale Motor Industries, which remain underutilised. "You can't claim to support local industry while importing luxury vehicles from South Africa," Zimunya said.
Debt remains another major concern. Despite promises to rein in expenditure, the government added US$640 million to the national debt in the first quarter of 2025, pushing the official debt to US$21.53 billion. However, major creditors, such as the African Export-Import Bank, have indicated that the actual debt figure could be as high as US$24 billion, further raising alarms over fiscal mismanagement.
Jephias Makiwa, an economist with the Zimbabwe National Chamber of Commerce, noted that the budget review largely overlooked the deteriorating conditions in key sectors such as retail and wholesale. "There was no mention of regulatory relief for retail, one of the most informalised and labour-intensive sectors," Makiwa said. Many businesses in retail face tight margins and regulatory burdens, forcing many to downsize or close entirely.
He also criticised the slow pace of budget execution, noting that only 35% of the annual budget had been disbursed to ministries by mid-year, with wages consuming 46.3% of total spending while just 24.1% was allocated to capital development.
Zimbabwe's shrinking formal sector and narrowing tax base also remain key challenges. Makiwa pointed out that only 24% of businesses are formally registered, meaning a small group of compliant firms shoulders the tax burden. "That's not sustainable," he said.
Economist Chenayimoyo Mutambasere also raised concerns over Zimbabwe's ongoing dependence on exporting raw commodities, particularly gold, platinum, and diamonds. "Without serious beneficiation policies, the government will continue to overtax consumers instead of expanding the fiscal base through industrialisation," she said.
Mutambasere also flagged the country's rising reliance on essential imports, including fuel and food. "Imports of diesel, maize, and wheat have surged dramatically in 2024, reflecting a growing energy dependence and a food security crisis following a poor agricultural season," she explained.
In summary, while the 2025 mid-term budget included some positive proposals, including moves to ease the cost of doing business and efforts to formalise the informal sector, economists argue that it fails to address the fundamental structural weaknesses that continue to hold back Zimbabwe's economy. With persistent challenges in key sectors, high debt levels, and a lack of bold reforms, critics have labelled the review as little more than "paper growth," offering little in the way of real economic progress.
Source - The Standard
