HomeLocal NewsNcube proclaims surplus despite seeking bailout

Ncube proclaims surplus despite seeking bailout


Finance minister Mthuli Ncube , who recently pleaded for a bailout package from international financial institutions saying government coffers had run dry, yesterday took a surprise turn, announcing that Treasury has enough money to last the rest of the year.

He also claimed the state was liquid enough to withstand the economic effects of the raging Covid-19 pandemic and therefore did not budget for the necessary social safety nets as some countries have been doing.

This is despite his April 2 letter to the World Bank, International Monetary Fund and African Development Bank, in which he passionately pleaded for at least US$200 million, saying Zimbabwe’s economy could contract by between 15% and 20% during 2020, with serious consequences for the country and its neighbours.

He stated that 8,5 million Zimbabweans (half the population) are food insecure and would starve, should urgent financial assistance not be provided.

“So bad is the situation, that it could cause an implosion of the state and threaten security in neighbouring states,” Ncube warned in his leaked letter.

In response to Ncube’s plea for help, Paris Club chairperson Odile Renaud Basso on July 2 refused to extend more money to Zimbabwe until the country implements political reforms, normalises relations with the international community, successfully implements an IMF Staff-Monitored Programme (SMP) and clears all arrears.

The Paris Club comprises major financiers.

Zimbabwe’s external public debt stood at US$8,094 billion, as at the end December 2019. Of the total external debt, arrears account for 73%.

Despite begging for assistance, Ncube yesterday emphasised that Zimbabwe had recorded an ZW$800 million budget surplus in the period from January to June 2020.

In his mid-year budget review presented in Parliament yesterday Ncube claimed ministries have on average utilised only 46% of their fiscal votes as at June 2020, meaning 54% of the original 2020 budget remains unutilised.

“This enables us to operate to the end of the year as we reallocate 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,” Ncube said.

“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.”

In the original budget, Ncube had allocated ZW$6,5 billion to the health sector which he said will cater for health infrastructure, personnel welfare, medicines, drugs, and sundries, among other essential hospital equipment and necessities.

He had allocated ZW$2,4 billion to the Public Service, Labour and Social Welfare ministry to scale up social protection interventions in the wake of increased vulnerabilities among citizens.

During the period from January to June, total social protection expenditure amounted to ZW$902,2 million against targeted expenditure of ZW$1,253 billion, according to Ncube. “The distribution of major expenditures among other social interventions were as follows: Drought Mitigation ZW$412,2 million, Basic Education Assistance Module ZW$150 million, sustainable livelihoods ZW$67,3 million, support to disabled persons ZW$7,1 million, harmonised social cash transfers ZW$158,1 million, support to elderly persons ZW$3 million, children in difficult circumstances ZW$5,1 million, health assistance ZW$11,9 million and Covid-response ZW$85,5 million,” he said.

Ncube said 760 000 vulnerable food insecure households were supported with grain across the eight rural provinces per month during the first quarter, bringing the total expenditure to ZW$414,2 million under the food deficit mitigation strategy.

“In the same vein, government has scaled its support for harmonised social cash transfers to food poor and labour constrained households in 23 poorest districts of the country to about 63 000 households.

The programme is aimed at household economic strengthening, building household resilience and reducing negative coping mechanisms. The payments improved compared to 2019 as they are now enabled by the mobile transfers through EcoCash.”

The government spent ZW$67,5 million across all the 10 provinces in the country to build communities’ resilience by facilitating income generation projects.

“With regard to other interventions, generally there was an increase in levels of support from ZW$10 to ZW$200 per individual due to increase in administration and capita grants required for the upkeep of institutionalised personnel under support towards the elderly, children in difficult circumstances, as well as for the disabled persons,” Ncube said.

“Given the need to respond to Covid-19 mitigatory measures, government has directed that resources under devolution be channelled towards Covid-related facilities such as water and sanitation, isolation, quarantine and treatment centres.”

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