Interventions to mitigate the fallout from the coronavirus pandemic are expected among key measures that will be unveiled by Finance and Economic Development Minister Professor Mthuli Ncube in the Mid-Term Budget Review this week.
Speaker of the National Assembly Advocate Jacob Mudenda last week announced in the August House that the policy statement would be delivered on Thursday.
“The Minister of Finance and Economic Development was supposed to make a Ministerial Statement today (Wednesday) as requested by this August House on the state of the economy,” said Adv Mudenda.
“The Honourable minister has indicated that because he is going to present a Mid-Term Review; he has requested that the Ministerial Statement not be made today but will form part and parcel of his mid-term review next week (this week) on 16 July 2020.”
The market expects the review to contain additional measures to stimulate the economy, which has been affected by successive droughts in the 2018/2019 and 2019/2020 seasons, Cyclone Idai in March last year and recently the coronavirus pandemic.
Africa Economic Development Studies executive director Professor Gift Mugano said Minister Ncube should extend indefinitely the US dollar-denominated Covid-19 hardship allowances for public sector employees.
Treasury, he added, should strongly consider a United States dollar-denominated budget, given the recent volatility of the Zimbabwean dollar and the hyperinflationary environment.
“I do not envy the job of the Minister of Finance given that the circumstances we are in are quite complicated,” said Prof Mugano.
“We have seen direction by Government to pay workers in US dollars, so obviously we need to see that in the budget and how it is going to be factored in.
“What I know is that there is no way, economically, that there can be a reversal or withdrawal of that Covid-19 allowance because it has raised expectations and improved the conditions for most workers, even though it is only a drop in the ocean.
The budget, said Prof Mugano, should be reform-oriented in line with the Transitional Stabilisation Programme (TSP).
There was also need for tax concessions that promote production. Zimbabwe National Chamber of Commerce chief executive officer Mr Christopher Mugaga said the review must focus on addressing the Covid-19 pandemic while also providing stimulus for the industry.
“It should be a Covid-19-centred budget, meaning it should be a Budget which speaks to the realities of what we are experiencing,” he said.
“It has to be a budget which is crafted with three things in mind.
“First, knowing that Zimbabwe is under sanctions and it is difficult to access lines of credit, especially from the Bretton Woods institutions.
“Second, to understand that it is being announced when Zimbabwe has been ravaged by drought and there is real potential for another drought.
“Last, it should be a budget which reflects on the dynamics of the changes regarding the currency. We cannot just say that now we have an auction so the Zimbabwe dollar is strong and we will announce the budget in Zimbabwe dollars.”
Mr Mugaga said he hoped that Minister Ncube would resist the urge to present an allocative budget instead of one that focuses on policy tweaks that stimulate production.
Treasury, he added, should consider refining the 2 percent intermediated money transfer tax (IMT) to ensure that revenue collected triggers development and reduces inequalities in society.
The $18 billion economic recovery package unveiled in May needs to be fine-tuned to reinvigorate the economy and provide relief to individuals, industries and small businesses impacted by the economic slowdown caused by the coronavirus pandemic, he added.
Mr Mugaga added that Treasury must revise upwards the tax-free threshold to around $7000 in line with the poverty datum line.
University of Zimbabwe Economics Department chairperson Professor Albert Makochekanwa said the Budget should prioritise the forthcoming summer cropping season.
“We are all aware that the budget has been overstretched because of Covid-19,” said Prof Makochekanwa.
“When the budget was presented last year in November, no one knew there was going to be this animal called Covid-19. Government has had to incur unintended expenses and shifting of resources from some other expenditure items.
“I am also sure he (Minister Ncube) will also address the issue of preparing farmers for the summer cropping season.”