Live updates: Zimbabwe National Budget 2016

FINANCE minister Patrick Chinamasa will today present his third budget, where he has little fiscal space due to the depressed economy.

Online Reporters

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16:39: Chinamasa ends his budget presentation.

16:29: To exempt tax interest earned from deposits with a tenure of more than 12 months.

16:28: Gold royalty reviewed downwards from 7% to 5% effective from October now 3% on incremental output using the previous year as a base year effective January 2016.

16:24: State procurement Board to review capacity of winning bidder…publicise contract awards and prices.

16:21: CCTV at border points to deal with corrupt practices.

16:14: Government threatens to cancel licenses of insurance companies for low uptake of prescribed assets.
16:13: Short term insurers for core capital to increase to $2,5 million from 1,5 million by December 2016.

16:12: The Finance Minister Patrick Chinamasa has raised minimum capital requirements for insurance companies.

16:07: Infrastructure bond on state schools and universities to be floated.

16:06: $2 million for performance audits in the Auditor General’s office…reform account unit to be established to monitor public entities and analyse financial statements.

16:00 Efforts to mobilise $1,9 billion for railway is still underway.

15:57:
Victoria Falls 150 million dollar project will be commissioned and has the capacity to accommodate 1,2 million people per year.

15:54:
20 independent power producers are licensed to date and have been given non financial guarantees.

15:54:
ZETDC debtors stood at 1 billion as at September 30

15:47:
274 hectares of land has been given to tourism for development. Government is set to finalise the Diasdpora policy in 2016 to improve remittances.

15: 42:
New indigenization framework to be gazetted before Christmas in a matter that promotes investment.

15: 39: Amendments to Mines Act already approved by government but not yet gazetted.

15:38: Hwange management should address issues to do with the increase of coal production after acquiring machinery.

15:35: Government licensed 12 companies to export chrome ore which is in excess of their smelting capacity.

15:33: RBZ acquired polishing equipment from India to beneficiate diamonds.

15:33: 24 tonnes of gold in 2016 up from 18 tonnes in 2015.

15:33: Zimbabwe Diamond Mining Company will be the name of the consolidated diamond mines.

15:32: Negotiations for 60 million dollars for concessionary loans finance small scale farmers are underway…to be concluded in December.

15:26:Targeting 11,000 hectares of irrigable land.

15:26: Another 30 million dollars to come to Brazil from agriculture.

15:23 Mugabe is napping during Chinamasa ‘s budget presentation.

15:22:
Fiscal incentives on horticulture targeting 240 tonnes, 25 million for soya beans.

15:22: Treasury commits to free cotton inputs for the next three seasons to boost output.

15:18:
Government has cleared all arrears to farmers for maize grain deliveries.

15:16: Ministry of Health allocation falls short of the Abuja Declaration.

15:14:Projected revenue of 3,85 billion dollars

15:13: Employment cost 3,191 billion dollars.

15:13: Chinamasa announces 4 billion dollar budget.

15:09: Budget deficit as at September was $527 million dollars funded through domestic borrowing which crowds out private sector investment.

15:08: Recurrent expenditure at 93 %, capital expenditure was 6%, this is unsustainable says Chinamasa.

15:07: The bulk of public debt relates to treasury bills and the assumption of the RBZ debt.

15:05: Imports seen at US6,2 billion dollars next year from US6,3 billion dollars bthis year.

15:05: Public debt stands at 8,36 billion as at September.

15:04: Exports to grow from 3,7 billion from 3,4 billion in 2015

15:04: Negative inflation expected in 2016

15:02: Agriculture underperformed at -2,3%

15:01: Zimbabwe’s economy grew by 1,5% in 2015 driven by tourism and construction. The economy is expected to grow by 2,7% in 2016.

15:00:
Mineral process to remain depressed in 2016.

15:00 Sub-saharan projects to grow by 3,8% from initial projection of 4,4%.

14:59:
Chinamasa says financial support is expected from World Bank , IMF and other development partners

14:58:
IFIs have accelerated engagement with the private sector.

14:55:
The National Budget’s thrust is to consolidate a platform to unlock fresh capital

14:55: Chinamasa acknowledges stakeholder support and President Robert Mugabe ‘s support in particular.

14:50:
Finance Minister Patrick Chinamasa takes to the podium and begins introductions.

14:49:
President Robert Mugabe arrives in Parliament for the 2016 National Budget Presentation

14:22:
Lawmakers have taken their seats as they await the presenation of the Zimbabwe 2016 Budget.

The #Zim2016Budget comes against a backdrop of;

  • About 92% of the budget revenue is spent on recurrent expenditure leaving only about 8% for capital expenditure being the growth enhancing component of the budget with potential to create future revenue streams.
  • Short term consumptive expenditure is prioritized over long term public investment , that for example improve growth enhancing infrastructure.
  • In addition to hard infrastructure, there is need for adequate funding of health and education, for example, to strengthening the human capital that is essential for the sustainable development of the country.

Zimbabwe currently has a public debt-held by central government – of about 60% of the GDP. this is similar to other countries with fiscal rules. However the reason it is not higher is the challenges the government faces in borrowing. anticipating a time when it is easier for the government to borrow, Zimbabwe should formally adopt a rule to ensure that debt levels do not unnecessarily balloon. similar to African countries that are members of the West African Economic and Monetary Union (WAEMU)and Central African Economic and Monetary Community (CEMAC), the government should consider adopting a debt rule that limits the total stock of public debt for the central government to below 70% of GDP. The current experience under the IMF Staff Monitored Programme (SMP) has revealed that government can sustain this.Zeparu Economic Barometer

2015 budget highlights

  • Highlights from the 2015 National Budget
  • Economy to grow 3,2% (2014:3,1%)
  • Inflation to remain below 1% in 2014 and subdued in 2015
  • Government to collect US$4,1 billion revenue against expenditure of US$4,115 billion
  • Government to collect US$3,93 billion by 2014 year-end
  • 2015 recurrent expenditure seen at 92%
  • Employment costs to chew 82% (US$3,2 billion) of 2014 budget
  • Mining sector to grow by 3,1%, ICT by 6,4% and Transport by 2.9%
  • Exports expected to reach US$3,83 billion in 2015
  • Imports seen at US$6,15 billion
  • Tax free threshold increased to $300 per month from $250
  • Tax amnesty extended to 15 months from six months
  • Excise duty on cigarettes increased to $20/1000 sticks from $15/1,000 sticks
  • Excise duty on clear beer reduced to 40% from 45%
  • Govt to impose tax on imported doughs, buns and bread
  • Corporate tax on exporting companies to be lowered by between 15 and 30%
  • Royalties on firms selling to local diamond cutters and polishers to be scrapped
  • Agriculture to grow by 3,4%, government to mobilise US$252 million for presidential inputs programme
  • Tourism sector to grow by 4,7%(2014: 3,9%)
  • Treasury to defer export tax on Platinum Group Metals until Zimplats commissions its $200 million mineral base plant

As Zimbabwe’s economy continues to underperform, treasury has made several revisions of key economic indicators in line with the prevailing situation.

Below are some of the projections made by finance minister Patrick Chinamasa during the 2015 Mid Term policy.

GDP growth rate at 1,5 pct from 3,2%.

Revenue projection revised to US$3,6 billion from US$3,99bn. Expenditure revised from US$4,1 billion.

Budget deficit seen at US$400 million.

Agricultural sectors performance for 2014 below expectations owing to poor rains and expected to further decline by 8,2%.

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