Mthuli Ncube declares surplus despite only 35% of budget spent

Finance and Economic Development Minister Mthuli Ncube on Thursday declared a budget surplus of ZWG3.3 billion for the first half of 2025, despite revealing that just 35.5% of the approved National Budget had been spent by mid-year.

Presenting the much-anticipated Mid-Term Budget Review Statement in Harare under the theme "Building Resilience for Sustained Economic Transformation", Ncube confirmed long-standing concerns that government ministries and departments often fail to fully utilise budgeted resources.

"Fiscal outlays for the period January to June 2025 amounted to ZiG98 billion, which is approximately 35.5% of the approved Budget," Ncube said. "Recurrent expenditures were ZiG74.4 billion, while capital expenditure and net lending amounted to ZiG23.6 billion."

Over half of the expenditure - ZiG45.4 billion - went towards employment costs, with operations taking ZiG18.8 billion, interest payments ZiG2.5 billion, and capital expenditure (including devolution) standing at ZiG23.6 billion. This left limited resources for critical infrastructure projects.

Speaking to journalists after the presentation, Ncube defended the low spending rate, attributing it to delayed disbursements in the first quarter.

"Ministries often take time to put their papers in order and we often experience limited revenue inflows early in the year. This partly explains the expenditure patterns," he said. "However, we are working on improving the pace and efficiency of spending."

During the first half of the year, Treasury raised ZiG1.3 billion for budget financing, including US$90 million through the issuance of domestic Treasury Bills.

In US dollar terms, the fiscal framework translates to revenues of US$7.5 billion and expenditures of US$7.7 billion, resulting in a budget deficit of US$168.4 million.

Ncube noted that inflation and exchange rate movements had been more stable than initially expected, helping to keep spending pressures in check. Revenue collections stood at ZiG101.2 billion against a target of ZiG118.1 billion, while expenditures were ZiG98 billion against a ZiG127.5 billion target.

On a cash accounting basis, the government recorded a budget surplus of ZiG3.3 billion for the first half of the year.

Looking ahead, Ncube said the government will intensify reforms to improve the ease of doing business, cut bureaucratic bottlenecks, and remove multiple licensing fees.

"Drastic reforms aimed at reducing the cost of doing business and eliminating unnecessary licensing requirements will be implemented aggressively in the second half of the year," he said.

The mid-year review underscores a paradox in Zimbabwe's fiscal management: tight spending controls have delivered a paper surplus, but slow disbursement rates continue to delay the rollout of critical development projects.