Finance minister Mthuli Ncube yesterday said there will be no supplementary budget as 54% of budget votes had gone unutilised.
Presenting a mid-term budget and economic review statement in the National Assembly, he underscored the pressing issues plaguing the economy, including currency volatility and galloping inflation although he insisted the country had recorded an ZW$800 million budget surplus.
Ncube said year-on-year inflation is projected to end the year at 300%.
Overall, he projected that the current account would remain in surplus in 2020 at US$1,2 billion, mainly driven by secondary income and the goods account as well as measures on the containment of non-essential consumptive imports.
This, he said, was an improvement on the US$921 million surplus recorded in 2019.
“Resultantly, for the period January to June 2020, a budget surplus of around ZW$800 million has been realised. This takes account of outstanding payments. This Mid-Term Budget and Economic Review takes stock of budget and economic performance during the first half of the year. Ministries have on average utilised 46% of their votes as at June 2020,” Ncube said.
“This also implies that 54% of the original 2020 Budget remains unutilised. This enables us to operate to the end of the year as we re-allocate to cover the critical needs, especially those related to Covid-19 and social protection. This position enables us to avoid tabling a supplementary budget, given our current levels of spending.
“Treasury will be dealing with arising expenditure pressures as we consolidate our fiscal position during the remainder of the year, taking account of revenue performance against inescapable reprioritised expenditures.”
At a time the economy has virtually self-redollarised amid runaway parallel market rates and galloping inflation, analysts said Ncube contradicted himself by pointing out that inflationary pressures continued to undermine budgeted provisions — including the cost of providing public services — yet he made no budgetary adjustments to cater for that.
Despite companies’ revenues declining, Ncube painted a rosy picture of state revenues which are seen shooting up to ZW$34,2 billion against a target of ZW$32,1 billion, resulting in a positive variance of ZW$2,14 billion or 6,7% of projected revenues.
The 2020 revenue collection was projected at ZW$58,6 billion, comprising tax revenues of ZW$57,6 billion and non-tax revenue of ZW$1,1 billion.
While there have been expectations to address the pressing issue of subsidies which have contributed to inflation, Ncube made no intervention despite revealing that the bulk of the current expenditure, estimated at ZW$19,7 billion, was on employment costs (inclusive of pension), subsidies, social benefits, goods and services as well as transfers to grant-aided institutions.
Projecting 4,5% GDP decline in 2020, against the initial budget projection of 3% growth, Ncube also forecast 10,8% decline in the manufacturing sector in 2020 against the original projection of 1,9%.
Mining is expected to decline by 4,1% in 2020, reflecting the impact of Covid-19 and other challenges pertaining to forex retention thresholds.
There was little respite for workers, with Ncube adjusting the income tax-free threshold from ZW$2 000 to ZW$5 000.
The Treasury boss said companies that make donations to medical facilities owned by the government, councils or religious organisations will now get tax deductions of up to the equivalent of US$100 000.
Donors who buy equipment or drugs for these facilities, or fund the construction, extension or maintenance of these hospitals qualify for the tax deduction.
Starting next month, Ncube is offering VAT exemptions for accommodation for domestic tourists for 12 months.