THE 2020 National Budget will focus on enhancing revenue collection through advancing the ongoing Zimbabwe Revenue Authority and other administrative reform initiatives meant to broaden the tax base and plug revenue leakages, Finance minister Mthuli Ncube has said.
The broke government, currently operating without lines of credit, sees tax revenues as its major source of income in the 2020 budget which, according to Ncube, will also be bolstered by mechanisms to curb leakages.
Addressing parliamentarians at a pre-budget conference in Victoria Falls, Ncube is also aiming at formalising informal business operations to bolster tax.
“The budget targets to curb corruption, which is a major source of leakages to public revenues; improving taxpayer compliance through facilitative Information Communication Technology-based processes to simplify tax payment procedures, to minimise taxpayer costs; and enhance records management; appropriate tax supportive measures and other tax dispensations; increase exports; formalisation of informal business operations, tax incentives for productive sectors, focus will be on the following: rebates, exemptions,” Ncube said in his 2019 budget performance and 2020 fiscal framework.
The government, whose appetite for internal borrowing and unbridled spending which have contributed to economic decline, says it will contain expenditure within sustainable levels to avoid recourse to the central bank overdraft facility and unbudgeted spending.
In his mid-term budget, Ncube said Treasury had recorded a ZW$803,6 million budget surplus between January and June 2019.However, analysts say Zimbabwe would experience a ZW$5,5 billion budget deficit as a result of the tumbling value of the Zimbabwean dollar and unrelenting inflation.
Ncube said government had set market stabilisation programmes for the macro-economic environment through fiscal and current account management. These measures, according to Ncube, would place Zimbabwe’s economy on the path to growth.
Economic resurgence will also be anchored on the ability to mobilise affordable lines of credit in support of productive sectors, complemented by savings bonds to enhance savings.
Ncube faces a stern challenge as the government ushers in currency reforms which will see the introduction of a fully-fledged Zimbabwean dollar even as the local currency continues losing value against the United States dollar.
According to analysts, the Zimdollar had lost 83% of its value against the US dollar since February as a result of spiralling inflation and parallel market volatility.
In his presentation, Ncube blamed galloping inflation on parallel market foreign exchange rate developments and market panic.“In the outlook 2020, inflationary pressures are expected to remain although relatively dissipated with month-on-month inflation expected to fall to single digit,” Ncube said.
The 2020 National Budget also seeks to enhance productivity and increase capacity utilisation of local industry in line with the National Industrialisation Strategy.
In 2020, the economy is projected to turn around, building on the success of the ongoing reform initiatives with government forecasting a bumper harvest during the 2019/2020 agricultural season.
“Improved rainfall season which should enhance agriculture production and electricity generation with trickle-down effects to all other sectors; recovery in aggregate demand; improvement in foreign currency availability, particularly from mining; and improved macro-fiscal stability and business confidence from implementation of reforms.”
Ncube said after the stabilisation of the macro-economic environment through fiscal and current account management, as well as introduction of the mono-currency, a platform for gradually ending austerity measures in favour of growth, productivity and prosperity objectives has been set.
Zimbabwe has endured austerity measures since last year with Treasury cutting government expenditure.