via Chinamasa presents 2016 budget today – NewsDay Zimbabwe November 26, 2015
FINANCE minister Patrick Chinamasa will today present his third budget, where he has little fiscal space due to the depressed economy.
by BUSINESS REPORTER
The economy is in deflation, facing liquidity challenges and faces de-industrialisation due to various challenges being faced by industry.
The debt overhang remains a big challenge for the country, as it has been failing to attract fresh capital from the international financial institutions.
The country had a budget of about $4 billion for the past four years, meaning that nothing much has been happening on the fiscal side. Foreign direct investment remains a challenge for the country due to policy inconsistencies.
Of the $4 billion budget, over 80% of the revenue goes towards civil servants wages and salaries.
Revenue streams for the country have been shrinking and for the third quarter of this year, Zimbabwe Revenue Authority collected $878,22 million against a target of $964 million due to depressed economic activities.
The 2016 National Budget is projected at $3,85 billion, with optimistic growth rates of 2,7% and the agriculture and mining sectors are expected to drive the growth.
Treasury said in its Budget Paper for 2016, fiscal space remains narrow, implying reliance on private sources for financing of various planned development projects and programmes.
International Monetary Fund resident representative, Christian Beddies said the economy has been severely affected by numerous challenges and consequently revenues have not been growing.
“This is not sustainable and the government has been clear about it. Strong growth and conducive policies going forward are essential to allow for more capital and social expenditure. The government is also making concerted efforts to rebalance the budget and address the high wage bill,” he said.
Beddies said the downside remain and the projections for the agriculture and mining sectors take into account the challenges these sectors face.
The Confederation of Zimbabwe Industries and Zimbabwe Congress of Trade Unions have said government should come up with policies that encourage investments.