Zimbabwe records ZiG 2.3 bln budget deficit

Zimbabwe’s Treasury reported a ZiG 2.3 billion budget deficit for the first half of 2024, but still gave assurances that the full-year budget is sufficient to cover Government operations in the absence of other significant shocks.

The recalibrated 2024 Macro-Fiscal Framework projects a year-end deficit of ZiG 5.6 billion (1.3 percent of GDP) against projected revenues of ZiG 93.2 billion (22 percent of GDP) and expenditures of ZiG 98.8 billion.

The new revenue target is higher than the previously projected Z$58.2 trillion or ZiG 87.9 billion.

The Government collected ZiG 36.5 billion in revenue against expenditure estimates of ZiG 38.9 billion during the first six months, resulting in the ZiG 2.3 billion deficit, according to Finance, Economic Development and Investment Promotion Minister , Mthuli Ncube in his 2024 Mid-Term Budget Review Statement yesterday.

Mthuli attributed the lower-than-expected revenue to a challenging economic environment, increased debt servicing costs, the currency transition and drought response measures.

He, however, said the budget shortfall was financed through borrowing and carried-over cash balances.
The total gross Treasury Bills (TB) issuance for budget financing for the period under review amounted to ZiG 1.77 billion (ZiG 1.11 billion and US$56.4 million) against a target of ZiG 2.3 billion.

During the period under review total Government spending reached ZiG 38.9 billion, representing 44.2 percent of the approved budget. Recurrent costs consumed ZiG 28.3 billion, while capital expenditure and net lending totaled ZiG 10.5 billion.

The minister acknowledged delays in public sector disbursements due to the Z$ to ZiG currency transition but maintained that a supplementary budget is unnecessary.

He cited on-target budget utilisation and the absence of new revenue measures as supporting factors.

However, despite recording a budget deficit of ZiG 2.3 billion and recording fiscal outlays of less than 50 percent, Mthuli does not believe there is a need for a supplementary budget.

“In the absence of new revenue measures and the budget utilisation, which is still within the target, the approved budget is still adequate to cater for Government operations to the end of the year, in the absence of other significant shocks.”

During the period under review, tax revenue collections amounted to ZiG 33.9 billion (92.9 percent of total revenue), while non-tax revenue amounted to ZiG 2 .6 billion (7.1 percent of total revenue) resulting in total revenue collection of ZiG36.5 billion.

The main contributors to revenue collections were Value Added Tax (VAT) at 25.3 percent, Personal Income Tax (PIT) at 20.7 percent, Excise Duty at 12.3 percent, and Corporate Tax at 9.7 percent.

Of the fiscal outlays, recurrent expenditures amounted to ZiG 28.3 billion, while financial and non-financial assets (capital expenditure and net lending) amounted to ZiG10.5 billion.

Compensation of employees amounted to ZiG 18.2 billion, constituting 46.8 percent of total expenditures, operations of ZiG 7.5 billion, interest payments at ZiG 368 million, and capital expenditure including devolution of ZiG 10.6 billion.

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