Budget deficit races to $230m in Q1

By | June 8, 2017

Source: Budget deficit races to $230m in Q1 – NewsDay Zimbabwe June 8, 2017

Zimbabwe’s budget deficit surged by 44% in the first quarter of the year to $230,8 million from the comparable period in 2016, as government failed to contain its reckless spending patterns, latest Treasury statistics have shown.

BY BUSINESS REPORTER

Total expenditures for the period January to March 2017 amounted to $1,1 billion, which was way above the revenue of $869,2m realised in the period.

Expenditure was dominated by recurrent at $879,1m, while capital expenditures and net lending amounted to $173,3m.

Of the expenditure, employment costs constituted 67% of total expenditure, while interest obligations amounting to $41m were paid in the first three months.

This was an improvement from the $808,4m collected during the same period in 2016.

Last year, the deficit in the first quarter was $159,8m. Revenues were $808,4m against expenditure of $968,2m.

The surge in the deficit showed that government is not committed to cut the coat according to size amid fears the deficit would widen ahead of the 2018 elections.

The deficit forces government to borrow from the domestic market thereby crowding out lending to the private sector.

Domestic credit increased by 17,5% to $7,92bn in March 2017 from $5,88bn in the comparable period last year.

The government was a dominant player in the market.

“Consequently, net claims to the central government increased by 40,2% to $4,034bn in March 2017. Credit to the private sector decreased by 0,3% from $3,50bn in March to $3,49bn March 2017,” Treasury said.

Analysts say government has to take bold reforms to contain the growing expenditure patterns with the bulk of it going towards salaries of the civil service.

Finance minister Patrick Chinamasa has been under pressure from hawks within the government, who have vetoed, on two occasions, his proposals to waive bonuses for the civil servants.

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