“The publication of the first annual budget review will be at the end of March 2017, when data for the full fiscal year 2016 will be available,” said Finance minister Patrick Chinamasa in his 2017 National Budget.
Financial Matters with Tinashe Kaduwo
Almost two months down the line, we are still yet to get the annual budget review. The Finance ministry made significant changes to the outline of the budget statement, including a promise to introduce an annual budget review.
This was done in response to stakeholders’ call to strengthen the outline of the budget statement presentation as an instrument of accountability and fiscal transparency. Given serious macro-economic headwinds, the changes were of great significance in improving policy engagement, transparency and accessibility for all concerned stakeholders. As noted by Chinamasa: “It is in this spirit that Treasury, starting with the 2017 National Budget, is introducing a streamlined budget statement, which is also consistent with fiscal transparency best practices. A complementary objective is to produce more analytical material based on economic and fiscal trends, and to include more meaningful tables and charts.”
As such, the 2017 national budget comprised the budget statement, budget speech, the blue book and a leaflet on budget highlights, summarising key policy interventions.
Some of the elements of the budget such as extensive economic review, which was traditionally presented as part of the national budget, was shifted to the promised Annual Budget Review. “Extensive economic review material, historically presented as part of the national budget will from now onwards be shifted from the budget statement to a new publication, Annual Budget Review,” said Chinamasa.
The delay in the publication of the annual budget review raises serious concerns given the current macro-economic headwinds, questions surrounding Treasury Bills and sustainability of government expenditure. The document is expected to give a detailed breakdown of 2016 fiscal year performance in terms of government expenditure, its sources of financing and the actual size of the budget deficit.
Just like the national budget, the budget review is an important document, as it provides a basic guide to businesses. The Finance ministry should as such deliver on its promises. According to Chinamasa, “This (the annual budget) will allow scope for reporting of previous fiscal year expenditure and revenue data outturns, as well as dedicated in-depth analysis of developments during the entire previous fiscal year. The issuance of the annual budget review at the end of March, therefore, makes the issuance of the mid-term Fiscal Policy Review no longer necessary, save for exceptional circumstances requiring supplementary budget proposals”.
2016 was one of the worst years in terms of economic performance and business activity. Overrun government expenditure resulting in a US$1,2 billion budget deficit was a major source of economic concern. Over 90% of government expenditure was recurrent, with employment costs alone constituting 81% of total revenue. In the region, government employment costs on average are less than 40% of government revenue. For example in Kenya, employment costs constitute 35% of government revenue, Ghana 28% and Zambia 32%. The budget review will be important as it will give a detailed outline of these key matrices and improve fiscal transparency. Unlike the Reserve Bank of Zimbabwe, which is religiously publishing all its key policy documents and economic developments updates, Treasury has not be living up to its promises. In the 2017 budget statement, Chinamasa said, “Treasury will, however, continue to provide Quarterly Treasury Bulletins, capturing quarterly macro-economic and fiscal developments, in addition to the Consolidated Monthly Financial Statements published monthly in line with the Public Finance Management Act”.
The nation eagerly awaits the publication of annual budget review as a stepping stone to fiscal transparency, policy engagement, accountability and accessibility.
Kaduwo is an economist at Equity Axis. — firstname.lastname@example.org/ email@example.com