Finance and Economic Development Minister Professor Mthuli Ncube addresses Parliament on the state of the economy yesterday
Measures contained in the Transitional Stabilisation Programme (TSP) and 2019 National Budget have seen Government revenue collections surpassing targets by 8,2 percent, Finance and Economic Development Minister Professor Mthuli Ncube has said.
He said this while delivering a State of the Economy report in Parliament, amid high drama, especially from opposition legislators who continued to interrupt the business of the day.
The presentation was stopped midway as Parliament rules dictate that business cannot continue anytime after 6.55pm, and is expected to continue today at the instigation of the august House.
Away from the drama, Prof Ncube said while challenges are being experienced in the economy mainly due to drought that characterised the 2018-19 summer cropping season, together with the impact of Cyclone Idai and foreign currency shortages, the economy is still punching above its weight.
“Fiscal consolidation and stabilisation measures in the TSP and the 2019 National Budget are paying dividends, with revenue collection in the first quarter of 2019 performing above target by $146 million while expenditures were contained below the target of $218,9 million,” said Prof Ncube.
“As a result, a budget surplus of $443,1 million was realised during the quarter, creating an additional space of financing social development programmes and unforeseen exigencies related to drought and the impact of Cyclone Idai.”
Cumulative tax and non-tax revenue collections in the first quarter of the year jumped to a record $1,9 billion against a target of $1,8 billion, resulting in a positive performance of $146 million or 8,2 percent.
Prof Ncube attributed the improved tax revenues to the strengthening of Zimra collection systems and plugging of tax loopholes.
The intermediated money transfer tax (IMMT) — commonly known as the 2 percent tax — generated monthly averages of $95 million against a target of $50 million.
This allowed the Government to use some of the funds to address immediate challenges that confronted victims of Cyclone Idai, devolution and the education and health sectors.
The upward review of excise duty on fuel also generated revenues of $146 million in February, and Prof Ncube expects the various revenue collection measures to see the country generating $9,6 billion by end of the year.
Despite a bad agriculture season, Prof Ncube said grain stocks at the Grain Marketing Board (GMB) stood at 876 000 tonnes at the end of March, which is adequate for human consumption for the next seven months.
“However, in view of the current drought, importation is inevitable before the next harvest,” he said.
Turning to the mining sector, Prof Ncube said Government is “seized with addressing the challenges facing the mining sector”.
The challenges mainly relate to foreign currency shortages, which interrupted operations in the first quarter, resulting in production declines across all minerals except chrome.
Prof Ncube is confident that overall output targets for the year “are achievable” with most targeted minerals such as gold, nickel and platinum producing more than 20 percent of total expected output for the year.
This year’s target for gold production is 40 tonnes, up from last year’s 33 tonnes.
The manufacturing sector, which is also restrained by challenges related to financing, utilities and foreign currency availability, is expected to record a marginal 0,1 percent growth this year.
The marginal growth is set to be driven by foodstuffs and non-mineral products.
Said Prof Ncube: “In the outlook, the performance of the sector is expected to benefit from improved investment following the latest round of ease of doing business reforms, and the enactment of the ZIDA Bill, which is now before Parliament.
“In addition, the Local Content Policy Bill is being finalised and also the Industrialisation Policy being finalised by the Ministry of Industry and Commerce will support domestic firms to increase production through utilisation of local factors of production.”
He said it remains critical for Government to explore private sector financing facilities required to support industry’s recovery, production and export growth.
Prof Ncube also said Government is making “all arrangements to ameliorate the fuel supply situation” through the provision of additional lines of credit to make sure fuel supply is increased.
However, fuel consumption has declined since January with US$138,7 million diesel imported in the first two months, compared to US$224 million imported in the two months of last year.
Petrol worth US$74,3 million was also imported in the first two months compared US$105 million in November and December last year.
The Government’s Transitional Stabilisation Programme ends in December 2020 by which time the country’s economy will have taken shape for serious growth.