By Rungano Dzikira
Finance and Economic Development Minister, Mthuli Ncube has unveiled a budget which seeks to cut Government expenditure, and push production frontiers across all sectors of the economy, in an effort to foster economic growth in 2020 in line with the austerity for prosperity call.
Presenting the 2020 national budget in parliament this Thursday, the finance minister said 2020’s budget marked the exit from austerity to growth stimulation and employment generation era through promotion of production oriented investment and productivity whose thrust will be anchored on ‘Gearing for Higher Productivity, Growth and Job Creation’ through fiscal adjustment, export diversification, import substitution, reduction in expenditure, and stimulation of productivity across sectors in line with the Transitional Stabilisation Programme (TSP).
“Revenue collections for 2020 are estimated at ZWL$58.6 billion. In order to avoid the undesirable impact of deficits on money supply and macroeconomic stability, the 2020 Macro Fiscal Framework espouses a low budget deficit of around 1.5% of GDP implying expenditures of ZWL$63.6 billion, excluding retentions,” he said.
With regards to the fiscus, implementation of fiscal consolidation reforms saw consistent monthly budget surpluses or savings reaching ZWL$1.4 billion between January and August 2019.
“Similarly, the current account managed to deliver a positive balance of US$116.4 million during the first half of the year, which all pointed to positive signs for restoring the much needed macro-fiscal stability, and elimination of the twin deficit.”
This year’s reforms, were said to have been centred on “Austerity for Prosperity” which the minister said were in no way a retribution.
To correct that, the New Dispensation had to put aside the notion of short cuts, magic solutions, and loose funding, by strengthening fiscal discipline and tightening monetary policy, in order to start rebuilding the economy which they say has since managed.
The finance minister, however, lamented over overspending and how it had in turn affected 2019’s budget objectives.
“Spending outside the Budget and macro-economic shocks disrupted the attainment of some of the TSP targets in 2019 as such we propose refraining from unbudgeted operations.”
“2020 Budget prioritises enhancing productivity for growth that creates better jobs and ensures equity and inclusivity. As such, the thrust for 2020 will be centred on ramping up productivity in the agriculture, manufacturing, mining and services sectors to create jobs and reduce imports,” he added.
In an effort to capacitate upcoming industries, the 2020 Budget provides for capitalisation of institutions, which support various MSMEs projects, such as a Women Development Fund, ZWL$20 million; Community Development Fund, ZWL$15 million; Zimbabwe Women Microfinance Bank, ZWL$100 million; SMEDCO; ZWL$90 million; and Empowerbank, ZWL$50 million.
The Minister also projected a 3% growth rate for 2020, on the back of better rainfall supported by increased support towards rehabilitation and development of irrigation infrastructure, improved macroeconomic stability through continued fiscal and monetary discipline, as well as a substantial improvement in the balance of payments following; improved electricity supply, extension of supportive tax and non-tax incentives to stimulate domestic production.
Likewise, monthly inflation is expected to fall to a single digit from the first quarter of 2020 to close the year around 2%.
