GOVERNMENT faces a financing gap of $800 million this year due to low revenue and high expenditure, amid fears it will borrow from the domestic market to plug the hole.
Source: Zim faces $800m financing gap – NewsDay Zimbabwe May 19, 2016
“The projected domestic loan repayments of $678,6 million and a budget deficit of $150 million, result in a financing gap of$828,6 million for the year 2016,” the Finance ministry said in its first quarter bulletin.
According to the first quarter treasury bulletin, government issued Treasury Bills worth $245 million on the domestic market during the period. Of the amount borrowed, $15,9 million went towards financing the budget deficit, while $229,1 million went towards debt repayment and other activities, it said.
The ministry said, in response to the undesirable budget outturn, government was instituting a cocktail of measures meant to boost revenues and rationalise expenditures.
“Government has issued various Treasury circulars instituting expenditure rationalisation measures. The measures are expected to yield savings of about $16 million,” it said.
The government has been under pressure due to the burgeoning wage bill, which takes over 80% of revenue, which has crowded out spending on social and capital projects.
In a recent report, the International Monetary Fund (IMF) said Zimbabwe cannot use fiscal policy to deal with adverse shocks, for its social and development needs, because it lacks the necessary resources and it spends too much on wage outlays.
“For the time-being, the budget needs to target a broadly balanced fiscal position, while reprioritising spending toward social and development outlays,” IMF said.
It said the stance would help restore fiscal sustainability and increase the capacity to repay the country’s external debt.
“The objective is to unlock foreign financing that could allow the government to run small-to-moderate deficits in response to adverse shocks and raise the spending levels for social and infrastructure needs,” IMF said.
COMMENTS
That is no problem for Zanu. Zanu will print exactly that amount of money in Zanu Bond Notes as a first step and suck hard currecy (US Dollars) from the people in exchange for their Bond Toilet Paper. Past behaviour is the best indication for future behaviour and this procedure has already been tried and tested by Gono as a solution. The people of Zimbabwe, probably supported by the diaspora, will effectively bank roll the Zanu expenditure by taking Bond notes as change for their hard earned hard currency? All that remains to be seen is if the MDC feel sorry for Zanu and suggest a GNU 2 to help Zanu out? ZAPU did it once with the Unity Accord in 1987, and then 20 years later, the MDC told us that they were much smarter than ZAPU and would never allow Zanu to use them in a GNU but some how when the MDC went to pull the rabbit out of the hat The Jongwe had already eaten the rabbit?