Solid revenue performance drives Zimbabwe economic growth

THE Zimbabwe Revenue Authority (Zimra) has clocked a cumulative ZW$311,54 billion in revenue collections for the nine months period ended September 2021 against a target of ZW$279,22 billion, which is 11,57 percent above target.

The country’s revenue collection performance has remained positive in the course of the year despite the adverse impact of the Covid-19-induced lockdown measures on businesses and individual consumers.

Although the upwards adjustment in figures largely reflect the impact of inflationary pressures on the economy in line with the prevailing foreign currency exchange rates, economic experts say strong domestic resource mobilisation, coupled with a resilient industry and export sectors, have anchored economic recovery in the absence of external financing.

With a budget of ZW$421 billion for 2021, which is largely financed using domestic resources, Government has been able to release funding for the rollout of numerous infrastructure development projects and finance the agriculture sector, health and social amenities, among others.

The Treasury has since ruled out any supplementary budget this year citing stable economic fundamentals and a balanced budget.

Riding on continued fiscal consolidation measures and sustained macro-economic stability, Government was able to record a budget surplus of ZW$9,8 billion in the first quarter of 2021 alone.

During the period revenue collections settled at ZW$90,62 billion against a target of ZW$86,52 billion. In the second quarter revenue collections topped ZW$108,93 billion, which was 15 percent above the target of ZW$93,9 billion.

Yesterday Zimra reported an 18 percent above target of gross collections amounting to ZW$117,16 billion for the third quarter ended September 2021 against a target of ZW$98,77 billion.

After paying refunds amounting to ZW$1,2 billion, the tax authority’s net collections for the third quarter were ZW$115,97 million, which was 17,41 percent above target, said Zimra vice board chair, Mrs Josephine Matambo, in the latest revenue performance report for the period.

“Despite the negative impact of Covid-19 induced lockdowns on industry performance, revenue enhancement projects that were implemented during the quarter boosted revenue collections,” she said.

In comparison with the same period in 2020 when a total of ZW57 billion was collected, Mrs Matambo said nominal net revenue collections grew by 103,45 percent.

“All revenue heads registered positive growth in nominal terms. After adjusting for inflation, net revenue grew by 33,22 percent in the third quarter compared to the same period in 2020,” she said.

According to the report, the individual tax head takes the lead with a contribution of 17,48 percent to total revenue collected, followed by companies’ tax at 17,18 percent, VAT sales 16,13 percent, excite duty 11,92 percent, IMTT (2 cents tax) 10,51 percent, VAT on imports a 9,90 percent and customs duty at 5,96 percent.

Zimra has also lauded the stable economic environment, which continued to improve in the third quarter of 2021 as evidenced by a drop in year-on-year inflation by 55,09 percentage points from 106,64 percent in June 2021 to 51,55 percent by end of September 2021.

“Economic growth is expected to remain strong at 7,8 percent, up from 7,4 percent that was projected at the beginning of the year. The growth will mainly be driven by an increment in electricity generation and increased productivity in the agriculture and mining sectors,” said Mrs Matambo.

While the local currency has weakened marginally against the US-dollar during the quarter from 85,42 as at July 2021 to 87,66 at the end of September 2021, the Zimra vice board chairperson said the future remains brighter, based on preliminary projections.

“Although the economy remained on lockdown for the greater part of the quarter, revenue collection recorded a positive performance, a trend that is expected to continue for the remaining months of the year,” said Mrs Matambo.

“As more people are getting vaccinated against Covid-19 coupled with a more relaxed level 2 lockdown, more businesses are expected to operate for longer hours and this will have a positive impact on future revenue collections.”

Mrs Matambo said the tax authority was forging ahead with implementing ease of doing business interventions, plugging revenue leakages, enhancing transit management and compliance checks as well as anti-corruption strategies.

On the outlook she said: “the easing of lockdown restrictions in response to Covid-19 management and monitoring efforts is expected to go a long way in enhancing economic activity and subsequently revenue collections in the remaining months of the year”.-The Chronicle