Finance Minister Mthuli Ncube presented the 2024 Mid Term Budget Review, focusing on economic stability while ignoring calls for increased funding to critical sectors. Despite stakeholders’ pleas for more resources for health, education, and public services, Ncube stuck to a tight budget, emphasizing the importance of the recently introduced ZiG currency.
Under the theme “Consolidating Economic Transformation,” Ncube rebased the initially approved expenditure for the 2024 Budget from ZW$58.2 trillion to ZiG87.9 billion. He revealed that in the first six months, total expenditure exceeded earnings by ZiG2.4 billion, with spending at ZiG38.9 billion against total revenue collections of ZiG36.5 billion.
Tight Budget Amid Rising Challenges
Despite the dire economic situation, including a drought and a recent Zimbabwe Livelihoods Assessment Committee (ZimLAC) report showing that 22.3% of school-aged children are not attending school due to financial difficulties, early marriages, and pregnancies, Ncube did not allocate additional funds to social sectors. This decision signals challenging times ahead for the nation.
Ncube is placing his hopes on the stability brought about by the ZiG currency. “Revenue projections to year end stand at ZiG93.221 billion (22% of GDP), against expenditures of ZiG96.8 billion and a resultant deficit of ZiG5.6 billion,” he noted. He claimed that since the introduction of the ZiG currency, the economy has seen relatively stable prices and exchange rates.
In a bid to encourage the widespread acceptance of the ZiG currency, Ncube proposed amendments to the 50:50 tax payment legislation. He stated that if a company’s revenue exceeds 50% in local currency, tax should be paid proportionately in the currency of trade. “To promote the circulation of the ZiG within banking channels, curtail money laundering practices, and combat the financing of terrorism, I propose payment of all presumptive taxes in local currency, regardless of the currency of trade,” Ncube said.
Additionally, customs duties on selected products will now be payable in local currency. This move is part of a broader strategy to ensure that the ZiG currency gains traction within the economy, fostering a more stable and predictable financial environment.
Economic Stability and Growth
Ncube’s budget review underscores his commitment to maintaining economic stability and supporting inclusive growth. “Since the introduction of the ZiG currency, the economy is experiencing relatively stable prices and exchange rates. In this regard, the fiscal policy thrust is sustaining the prevailing stable environment necessary for inclusive economic growth to achieve the objectives of the NDS 1 and Vision 2030,” he emphasized.
Despite the criticisms and the evident financial constraints faced by many sectors, Ncube remains optimistic that the measures in place will lead to long-term economic growth. He urged stakeholders to support the initiatives aimed at consolidating economic transformation and to trust in the government’s vision for a stable and prosperous future.
The finance minister’s decision to hold a tight grip on the budget while promoting the ZiG currency reflects a cautious approach to economic management. By focusing on stability and controlled expenditure, Ncube aims to navigate the country through its current financial challenges and lay the groundwork for sustainable growth.
Source: New Zimbabwe
