via Govt in $218m budget deficit in first half-year September 12, 2014
GOVERNMENT incurred a $218 million budget deficit in the first half of the year as expenditure soared more than revenue generated further pushing pressure on the ailing economy.
In his mid-term fiscal policy review yesterday, Finance and Economic Development minister Patrick Chinamasa said cumulative revenue collections for the period January-June 2014 amounted to $1,735 billion, against a target of $1,847 billion, resulting in a shortfall of $112 million or 6,1% of total projected revenue.
Chinamasa said government expenditure for the first half of 2014, inclusive of loan repayments amounted to $1,953 billion.
This was against targeted expenditures of $1,848 billion.
Chinamasa said the expenditure profile for the first half of the year was not in tandem with planned expenditures, mainly on account of support to additional employment costs and loan repayments.
Employment costs, which were originally targeted at $1,410 billion constituting 72,8% of total expenditures for the period January-June 2014, expended to $1,486 billion or 76,1% of total expenditures, surpassing the target by $75,2 million.
Chinamasa’s predecessor Tendai Biti had popularised the cash budgeting system saying the nation should “eat what it had killed”.
He attributed the revision to under-performance of mining and manufacturing.
The slowdown in gross domestic product (GDP) growth, Chinamasa said was also reflected in reduced revenue collections, depressed exports and imports.
In a letter of intent to the International Monetary Fund, Zimbabwe projected a real GDP growth for 2014 of 3,1% reflecting among other factors, continuing low business and investment confidence, scarce liquidity, and subdued international prices for our major exports.
Chinamasa said the multicurrency regime, introduced in 2009, was here to stay and the pronouncement on special coins was to buttress the system.
He said he was working on a debt strategy to be presented to Cabinet in a fortnight on how the country would resolves its $8,8 billion total debt.
The debt has debilitated the country’s efforts to secure funding from bilateral and multilateral institutions to reboot the economy.
“Debt distress has continued to undermine the economy’s capacity to meet debt servicing obligations, resulting in the accumulation of external payment arrears since 2000,” Chinamasa said.
Chinamasa said although government has been implementing a tariff regime that endeavours to balance the sustainability of our balance of payments and support the competitiveness of the local industry, imported goods, however, continue to surge, amounting to about $3 billion for the period January to June 2014.
He said the bulk of the imports are finished products, most of which are already produced locally.
These include cooking oil, poultry, soap, maize meal, flour, beverages, dairy produce, furniture, sugar, fresh and canned fruits and vegetables, among others.
“The influx of imports, thus, continues to undermine growth
of the agricultural sector and recovery of the local industry,” he said.
Chinamasa said government would come up with measures to incentivise exporters saying his 2015 national budget would contain a cocktail of measures to enhance competitiveness for the export sector.
COMMENTS
If you add up all the corrupt people and how much they stole it might add up to the $218 million budget deficit.
It is disappointing that the minister avoids the real cause of our economic failure.We have to address the problem of looting and corruption.
Your naive and misguided policy of increasing tariffs is counter productive at the end because you are left with very few people to tax.It is impossible for our companies to compete successfully with other SADC countries due to our very costly productive system caused by high production inputs eg electricity,water,raw material,old equipment and labour costs.
The indigenous policy makes it impossible to get foreign partners with funds to invest in our country.The sad thing about all this is that you do not seem to care about the effects these tariff increases have to your poor countrymen.To you it is just business as usual.I pray that one day you should walk within Harare streets to face these desperate street kids with torn clothing and white dry mouths.
I don’t think these guys see all these street kids, rubbish everywhere and dilapidation around for they are in their luxury air conditioned tinted windowed cars, live in the northern part of Harare which is can actually be another country
The first basic thing a country needs to do to revive an economy is cut Government spending.Spending cuts are more effective than raising taxes at restoring shattered public finances. For an economy of Zimbabwe’s size the Cabinet is too big. The councils are too big. This Government is living well beyond its means.
Anyone that has a brain knows that reducing public spending lowered deficits more than raising taxes. Trading nations are usually more successful at restoring their public finances. Low interest rates and “sound macro-economic” conditions improve the odds of financial consolidations.As long as this Government carries on creating positions to appease certain people no matter how much the Chinese give them it will never be enough.Mixed Race I wish someone could read what you have just written. Alas they are to busy fighting for positions and don’t really care.
the finance minister maybe forgot to mention that the reason why people import these items is because of the low quality of local products which also are relatively more expensive compared to their alternative imported products. The minister could easily cut the deficit well cut the salaries, perks and bonus of senior government (those who don’t go along can leave and enjoy their already ill gotten gains), have a full audit of what the government owns i.e. all those expensive cars, conferences in expensive hotels and travels,redivert all the income from the resources into government coffers and create a more conducive investment environment by admitting and correct past failures. Yes that is a dream but surely if even some of these where to be implemented among others not mentioned Zim will be back in business without even taxing the povo. As someone said before the problem is this government , party and some individuals vanoda kudya pavasina kudyara