Source: 2022 Budget to improve Govt workers’ conditions: Prof Ncube | The Sunday News
Judith Phiri , Business Reporter
ZIMBABWE’s economy is set to further grow by 5,5 percent next year underpinned by another anticipated successful agriculture season and further easing of Covid-19 restrictions.The growth will also be supported by an anticipated National Budget estimate of $900 billion which among other measures also seeks to improve conditions of service for Government workers. Government employees are expected to share a $290 billion purse next year, Finance and Economic Development Minister Professor Mthuli Ncube said yesterday.
Giving a glimpse of what next year’s budget will be like, Prof Ncube told parliamentarians attending the 2022 pre-budget seminar underway in Victoria Falls, that Zimbabwe’s economy was set to continue on a rebound despite challenges faced this year. He said the 5,5 percent growth will, however, be lower than the anticipated Gross Domestic Product growth of 7,8 percent that the country will likely close this year at.
“Consistent with growth projection of 5.5 percent, resources envelope is now projected at $800 billion up from Budget Savings Plan level of $533 billion in 2022. The increase is attributed to changes in inflation and exchange rate dynamics. This will be complemented by Special Drawing Rights liquidation worth about $40 billion and domestic borrowing of $64 billion. This will bring the total budget envelope to about ZWL$900 billion in 2022,” said Prof Ncube.
He said next year the expenditure was projected at $849,51 billion and comprised of recurrent expenditure of $610,60 billion, compensation of employees $290 billion, capital expenditure of $238,91, inter-governmental transfers of $40.03 billion and the remainder going for debt servicing. The Minister said the 2022 National Budget fiscal consolidation will be sustained in 2022 in order to entrench the prevailing macro-economic stability.
“No recourse to Central Bank overdraft facilities will underpin the 2022 National Budget. Government will continue to strengthen the Public Finance Management System in order to address risks to budget sustainability, especially the accumulation of domestic arrears and extra-budgetary expenditures through further rationalisation of the recurrent expenditures and redirecting of savings towards infrastructure development. We will ensure that such expenditures are explicitly budgeted for, quantified and approved through the Annual Estimates of Expenditure.
Disbursements by Treasury will be strictly limited to available revenue and within the approved budget. There will be strengthening of the internal audit processes for Government,” added Prof Ncube.
He said the 2022 budget priorities were consistent with the objectives of the country’s economic blueprint, National Development Strategy 1 and remained largely unchanged from 2021, but reinforced. These include inclusive growth and macro-economic stability, developing and supporting productive value chains, optimising value in natural resources, infrastructure, Information Communication Technologies (ICTs) and digital economy, social protection, human capital development and well-being.
They will also include, among others, effective institution building, governance, engagement and re-engagement, arrears clearance and debt restructuring.
On the performance of this year’s budget, Prof Ncube said the revenue was likely to end the year at $495.01 billion against the budget projections of $390.8 billion because of increase in tax collections that are projected to increase by 31 percent from the first revised estimates. Tobacco levy, excise duty, Value Added Tax and the continued increase of electronic transactions in the country which ultimately increase flows from the two percent levy on Intermediated Money Transfer also contributed to the increase.
Prof Ncube said expenditures for the whole year (2021) are now projected to reach $508.99 billion, taking into account employment costs, Covid-19 related expenditures, social benefits, grain procurement as well as infrastructure projects. This, he said, will create a projected budget deficit of $13.96 billion (0.5 percent of GDP).
Meanwhile, the Minister said the global economy was now projected to grow by 5.9 percent in 2021, slightly lower than the July growth projection owing to heightened risks from the Covid-19 pandemic, especially for low income developing countries as well as supply disruptions for the advanced economies. However, Prof Ncube said GDP growth projections for the year 2022 remain unchanged at 4.9 percent and are expected to average at 3.3 percent over the medium term.
“Prospects for emerging markets and developing economies were slightly revised upwards to 6.4 percent in 2021, and slightly downwards to 5.1 percent for 2022. The Sub-Sahara region growth prospects were increased by 0.3 percent from the July update to 3.7 percent in October 2021, whilst it declined by the same margin for 2022 to 3.8 percent.”
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