Farirai Machivenyika Senior Reporter
The economic outlook for next year shows an estimated 5% growth with favorable international commodity prices, reasonable rains, more energy generated, continued use of the multi-currency regime, tight monetary and fiscal policies and mobilization of domestic resources, said Minister of Finance and Development, Mthuli Ncube. said yesterday.
Speaking at Parliament’s pre-budget seminar, held in Harare from yesterday to Monday, he said the budget will focus on ‘deepening economic transformation’ and be guided by the need to anchor stability macroeconomic situation, with no overdraft at the Reserve Bank of Zimbabwe and maintaining the budget deficit at less than 3% of GDP.
“The 2023 budget will be based on the macro-economic framework presented in the 2023 pre-budget strategy paper which projects 5% growth,” he said.
In addition to favorable commodity prices and expected good rains, economic growth will also be anchored on improved electricity supply, tight monetary and fiscal policy, and continued use of the multi-currency regime. Professor Ncube added that revenue collected is expected to be $3.1 trillion, in line with growth projections, with almost all, $2.9 trillion, being tax revenue.
The increase in revenue comes from the increased efficiency of the Zimbabwe Revenue Authority and the growth of the economy, which means there is more to tax.
“Spending is projected at $3.4 trillion, of which 44.7% will go to employee compensation at $1.5 trillion, while capital spending will be allocated 23.7% of total spending, between other expenses,” Professor Ncube said.
The government will strengthen the public financial management system to address accountability and risks to fiscal sustainability, particularly the accumulation of domestic arrears and extrabudgetary spending.
Grants would be streamlined by ensuring that these expenditures are budgeted and approved as part of the annual expenditure estimates, while disbursements from the Treasury will be linked to available revenue and within the approved budget.
The government procurement process will be subject to due diligence using the concept of value for money.
Priority areas for the 2023 budget will include economic growth and stability, support for productive value chains maximizing the value of natural resources, infrastructure development, ICT and digital economy, gender equality for women , SMEs, veterans, youth, sport, arts and culture, deconcentration and decentralization and engagement and re-engagement, Prof. Ncube said. Due to the illegal sanctions imposed on the country, the government is accelerating the mobilization of domestic resources as there is no access to affordable long-term loans from multilateral agencies or other entities outside the country.
The Speaker of the National Assembly, Barrister Jacob Mudenda also stressed the need for Zimbabweans to take advantage of national resources given the problems that have recently plagued the global economy.
“The Covid-19 pandemic and the Russian-Ukrainian conflict have slowed the pace of our economic growth to 3% against an average of 6% as planned in the National Development Strategy1.
“It is therefore imperative that the country takes advantage of domestic resource mobilization as a result of unpredictable and volatile aid as well as skewed foreign direct investment due to debilitating illegal sanctions,” Advocate Mudenda said.
“The negative impact of sanctions on our economy must be tackled head-on by following the President’s mantra: Nyika inovakwa igotongwa nevene vayo or ilizwe lakhiwa njalo libuswa ngabanikazi.
“To this extent, domestic resource mobilization demonstrates a strategic deployment of human capital that is highly productive. Thirdly, needless to remind this august assembly that our country has not been spared the rise in energy and food inflationary pressures, which have been exacerbated by the imbalance between supply and demand that has occurred in global scale because of the Russian-Ukrainian conflict.
“The resulting painful increase in the cost of living now threatens to push many people into poverty. We are therefore expected to offer strategies to lift the masses out of poverty and offer solutions to our country’s most pressing challenges. The solutions should largely be anchored on vigorous domestic resource mobilization to accelerate economic transformation.