FINANCE minister Mthuli Ncube has indicated that the 2019 national budget would reduce budget deficit to 4% of gross domestic product (GDP) in 2019, and subsequently to 2,4% in the following year.
BY MTHANDAZO NYONI
Budget expenditures over the period January to September 2018 amounted to $6,3 billion, against the planned $4,1 billion. Resultantly, expenditure over-runs of $2,2 billion were incurred, mainly due to over-expenditure on capital and net lending, employment costs and interest on debt.
The revenue and expenditure performance resulted in a budget deficit for the period January to September 2018 of $2,5 billion, against a target of $715,4 million. Deficit was financed by Treasury Bills and overdraft to the central bank.
“The 2019 National Budget first and foremost, targets strengthening fiscal responsibility and management of government expenditures in order to create an appropriate environment for increased budget financing of development programmes that enable and enhance the economy’s overall productive activities,” Ncube said while giving his presentation during the 2018 pre-budget seminar held in Bulawayo yesterday.
In this regard, Ncube said the 2019 National Budget, therefore, reiterates commitment to the fiscal anchors and target debt ceiling as a ratio of GDP — should not exceed 70% at the end of any fiscal year.
He said, central bank lending to the State at any time should not exceed 20% of the previous year’s government revenues.
He said his 2019 national budget would see a reduction of the budget deficit to 4% of GDP in 2019, and subsequently to 2,4% in 2020 and 2,2% of GDP by 2021 as well as strengthening budgetary support for development projects.
He further proposed penalties for non-compliance with the Public Finance Management Act fiscal management provisions.
“The 2019 national budget focuses on improving revenue collection and containing current expenditures, while increasing social service spending and developmental budget.
Ncube said the budget targets to curb corruption, which is a major source of leakages to public revenues, and also a major cost to various productive activities.
“Government will aim to ensure optimal resource mobilisation, consolidate the gains realised by the local industry through support measures provided by government such as the following: sector specific tax concessions which seek to attract investment; increase exports; reduce the cost of inputs into production, thereby expanding the tax base,” he said.
It will also look at improvement in the tax administrative system, thereby enhancing tax collection as well as provide relief to taxpayers; reduction in incidences of profit shifting by multinational corporations through comprehensive, internationally recognised legislation to curb transfer mispricing, including plugging leakages at ports of entry, securing unofficial points of entry, and curbing incidences of corruption, which will benefit collections of customs duty and also spur growth in corporate income tax collections.
The 2019 national budget will prioritise re-engagement, embracing all the major elements for cooperating with creditors over resolving Zimbabwe’s external payment arrears, including a comprehensive and coherent macro-economic policy framework, underpinned by a strong programme of fiscal adjustment and structural reforms.
He said the sequence will require the country clearing first, and simultaneously, its arrears to the AfDB, ($680 million), the World Bank,( more than $1,4 billion) and the European Investment Bank, ($308 million).
“Government will also continue to strengthen relations with development partners for implementation of measures aimed at leaving no one behind and ensuring sustainable and inclusive economic development, consistent with the sustainable development goals,” he said.