RECURRENT expenditure has gobbled a staggering 92,5% of government revenue, leaving just 7% for crucial capital projects with wages chewing 81,5% of income, Finance minister Patrick Chinamasa has disclosed.
In his presentation yesterday at the ongoing pre-budget seminar for MPs in Victoria Falls, Chinamasa said recurrent expenditures continue to crowd out the country’s capital outlays.
“Over 92% of the (2014) budget is consumptive. This clearly is not a developmental budget,” Chinamasa said. “The constrained nature of the budget implies underfunding of critical developmental projects and other social services necessary for sustained economic growth. Such projects include provision of health services, water infrastructures, road rehabilitation and maintenance, power generation, among others.”
Chinamasa told the legislators it was important to consider the limited fiscal space in crafting the 2015 national budget to be presented later this month.
“Furthermore, in view of the liquidity challenges in the economy, reliance on domestic borrowing will be limited.”
Chinamasa projected a 3,2% growth in 2015 underpinned by major contributions by agriculture projected to grow by 3,4%, mining (3,1%) and tourism (4,1%).
He said revenue from the period January to September 2014 amounted to US$2,73 billion against US$2,82 billion in the same period in 2013, a 3% decline.
Chinamasa said revenue collections as at October 29 2014 indicate underperformance with collections amounting to US$289,4 million against a target of US$336 million.
Reserve Bank governor John Mangudya told the MPs that total bank deposits have increased from US$1,36 billion in 2009 to US$4,94 billion as at September 30 2014.
He said the banking sector has in addition to deposits mobilised external lines of credit, adding that out of an approved US$2,57 billion, US$460 million has been utilised.
Twelve of the country’s 21 banks were profitable with losses in the remaining banks attributed to a high level of non-performing loans, which are over US$700 million, and escalating overheads among other challenges, Mangudya said.
Zimbabwe’s economy, reeling from low aggregate demand, falling production and a liquidity crunch, among a plethora of other problems, is now technically in recession after two successive quarters of negative growth.