Government unveils plan to plug 2025 budget deficit

The Government has outlined a raft of measures including increased taxation, asset sales, and the issuance of new securities in order to plug the projected 2025 budget deficit.

In 2025, Government expects to generate ZiG103.17 billion in revenue, while expenditure is estimated at ZiG111.68 billion.

This will result in a budget deficit of ZiG8.5 billion (1.5 percent of GDP), according to the recently released 2025 Budget Strategy Paper.

To bridge this gap, Finance, Economic Development and Investment Promotion Minister Mthuli Ncube said the Government will accelerate joint ventures with state-owned enterprises (SOEs) and explore the sale of non-core assets.

Furthermore, Treasury plans to issue new securities such as green bonds, social bonds, diaspora bonds, and debt swaps on both the Zimbabwe Stock Exchange and the Victoria Falls Stock Exchange.

On the revenue front, the Government will introduce measures to broaden the tax base, including automatic registration of small and medium enterprises for tax purposes and the inclusion of cross-border online transactions in the tax net.

Additionally, tax incentives, particularly in the mining sector, will be streamlined to optimize revenue collection, reads the 2025 National Budget Strategy Paper in part.

The 2025 taxation proposals will focus on further streamlining of tax expenditures, in particular, for the extractive sectors, where Government has already excluded the mining sector from Special Economic Zone incentives, in order to ensure a fair share from the country’s finite resources, as well as enhance optimal contribution to the fiscus.

The Government has also announced plans to accelerate the shift to the local currency, with more taxes to be paid exclusively in Zimbabwe dollars.

“Already, customs duties are now payable in local currency. Going forward, and in line with the de-dollarisation roadmap, other taxes will also be paid exclusively in local currency, including payment for Government services,” reads the 2025 National Budget Strategy Paper in part.

While these measures are aimed at addressing the budget deficit, economists have cautioned that their success will depend on the Government’s ability to implement them effectively and attract investor confidence.-ebsinessweekl