Economists are sounding the alarm over Zimbabwe’s escalating national budget, highlighting its potential to exacerbate the country’s inflationary pressures. This concern arises as the country gears up for its 2024 national budget presentation, following a trend of dramatic increases in spending.
In 2022, Zimbabwe’s total expenditure ballooned from an initial ZWL$968.3 billion to ZWL$1.9 trillion due to the local currency’s steep depreciation against the US dollar. This trend continued into 2023, with initial expenditures of ZWL$4.5 trillion soaring to a projected ZWL$22.62 trillion, reflecting over a 700% depreciation of the Zimdollar.
Comparing the fiscal years, 2023’s expenditure represents a staggering 1,090% rise from 2022’s figures. Revenue projections have similarly escalated, with 2022’s revised figure at ZWL$1.7 trillion, up from ZWL$850.77 billion, and 2023’s expected revenue jumping to ZWL$21.18 trillion from ZWL$3.9 trillion.
Ahead of the 2024 budget, economist Gift Mugano expressed concerns to NewsDay Business about the ministry’s increasing national budget. “Our budget has astronomically increased over the past five years, by 56,000% from 2018 to 2023,” Mugano said. He cautioned that this trend pumps excessive liquidity into the market, worsening the economy and depreciating the local currency.
According to a report by Newsday, Mugano also highlighted that the projected 2024 budget of ZWL$47 trillion, against the current ZWL$4.5 trillion, signifies a surge of over a thousand percent in a year. He warned that this would leave the Zimdollar “in the dustbin,” as the economy continues to dollarise.
Similarly, economist Prosper Chitambara warned that the 2024 budget increase could trigger further inflationary pressures, destabilizing the Zimdollar. He urged the government to maintain fiscal and monetary discipline, stressing the importance of adhering to the budget to prevent supplementary increases.
Mugano also raised concerns about contractors and service providers exchanging local currency disbursed by the Finance Ministry on the parallel market, further destabilizing the economy. This has been a recurring issue whenever the budget is presented, he added.
The soaring national budget in Zimbabwe is now a focal point of economic discussions, with experts calling for prudent financial management to safeguard the country’s economic stability.
