Zimbabwe’s tax collections were six percent below target during the first half of the year while mining royalties and value added tax plunged, reflecting a struggling economy, the tax agency said on Wednesday.
The southern African country’s economy, where mining contributes around 17 percent to gross domestic product, is expected to struggle this year due to low commodity prices and a poor farming season.
William Bonyongwe, the chairperson of the Zimbabwe Revenue Authority (ZIMRA) said tax collections between January and June were $1.66 billion, below the target of $1.76 billion. The agency collected $1.72 billion during the same period last year.
At $39.8 million, mining royalties were 39 percent below target. When compared to the same time last year, mining royalties fell 65 percent from $112 million.
“The performance of the revenue head (mining royalties) can be attributed to depressed international mineral prices,” Bonyongwe said in a statement.
Zimbabwe holds the world’s second largest platinum reserves and produces gold, chrome and iron ore.
Mining generates more than half of export earnings but weak global commodity prices, especially of platinum and gold, are expected to hit Zimbabwe’s earnings this year.
Bonyongwe said company tax was also 9 percent below target while value added tax (VAT) on the sale of local goods at $213 million was 33 percent short of target as consumer demand fell.
Businesses are struggling with high operating costs, competition from cheaper imports and biting electricity shortages and have been forced to retrench hundreds this year.
The Zimbabwe government has said the economy will flatline at 3.2 percent this year, but the World Bank sees growth at 1 percent, while some economic analysts forecast a slide into recession for the first time since 2008.