Info on 2020 budget unreliable: US

TATIRA ZWINOIRA

THE United States government says information on Zimbabwe’s budget for 2020 was unreliable given that actual revenue and expenditure deviated significantly from the enacted budget.

According to the national budget statement for 2020, Treasury was expecting revenue of ZW$173,49 billion (US$2,12 billion) consisting of tax and non-tax revenue of ZW$170,94 billion (US$2,09 billion) and ZW$2,55 billion (US$31,18 million), respectively.

These targets were against total expenditure and net lending projections of ZW$178,49 billion (US$2,18 billion)

However, by the end of last year the Zimbabwe Revenue Authority (Zimra) recorded net revenues of ZW$182,49 billion (US$2,23 billion).

The US Bureau of Economic and Business Affairs’ new 2021 Fiscal Transparency Report on Zimbabwe, says Zimbabwe made no significant progress in improving transparency and accountability.

“During the review period, the government made its executive budget proposal and end-of-year report, but not its enacted budget, publicly available online within a reasonable period of time. Information on some debt obligations was publicly available, but not information on contingent debt or state-owned enterprise debt,” reads part of fiscal transparency Report.

“The central bank has used off-budget accounts to conduct quasi-fiscal activity, and some of the debt may be assumed by the government. Publicly available budget documents did not include a substantially complete picture of revenue streams, including natural resource revenues. The budget included aggregate allocations to, but not earnings from, state-owned enterprises.

“Significantly, large state-owned enterprises did not have audited financial statements. The information in the budget was considered generally unreliable, as actual revenue and expenditure deviated significantly from the enacted budget and the government did not produce a supplemental budget.”

The report also found that the intelligence budget was not part of the public budget, and that there were no procedures in place to permit parliamentary review of it.

Based on the available statements, total expenditure was ZW$62 182 483 489 (US$745 682 738) from January to August 2020, which was 43% higher than the actual target.

Comparatively, income generated during the period was ZW$63 208 335 695 (US$757 984 599), about 16% higher than the initial projection.

Expenditure rose by a monthly average of 44,37% during the eight months under review owing to July and August recording increases of ZW$12,23 billion (US$147,85 million) and ZW$10,52 billion (US$126,15 million), respectively, in additional expenses.

The increases were largely because of the Zimbabwe government increasing the salaries of its workers, as well as increased spending on grants, goods and services.

Part of these increases included the government spending nearly ZW$1 billion (US$11,99 million) in maintenance costs in July and nearly ZW$2 billion (US$23,98 million) the following month.

With last year’s stimulus package of ZW$18 billion (US$360 million) and rising social needs costs brought about by a declining macro-economy, and Covid-19, total expenditure is estimated to have significantly risen in 2020.

The American report’s assessment on quasi-fiscal activities at the RBZ was confirmed by Treasury’s Zimbabwe Public Debt Management Office (ZPDMO) in its 2020 Annual Debt Bulletin released this week.

In it, the ZPDMO revealed that the RBZ owes a whopping US$5 billion, with figures confirming the government was using the central bank for quasi-fiscal activities last year.

Of this amount, US$2,9 billion is legacy debt owed by the private sector to their foreign suppliers which the central bank assumed owing to shortages of foreign currency.

The debt is higher than what was recorded in the RBZ’s December 2020 monthly economic review, where it recorded a debt of ZW$392,03 billion worth US$4,77 billion using the official forex rates at the time.

The American institution also highlighted how the Zimbabwe government’s awarding of natural resource extraction contracts or licences still remains shrouded in mystery.

“The criteria and procedures by which the national government awards natural resource extraction contracts or licences were specified in law,” part of the 2021 Fiscal Transparency Report on Zimbabwe reads.

“The government appeared to follow the law in practice, except in the diamond sector, where it is unclear if the laws are followed in practice. Basic information on mining concessions was not publicly available.”

This comes as the government has been accused of entering into loan agreements with questionable characters and countries by offering the country’s vast mineral resources as collateral.

According to a previous report by Transparency International Zimbabwe (TIZ) titled Corruption Risk Assessment of Mining Awards in Zimbabwe, 19 vulnerabilities were found in the process and practice of awarding blocks of claims for precious metals which lead to 22 corruption risks.

Both the Office of the President and Cabinet (OPC) and the Ministry of Mines and Mining Development were named as central to the evolution of vulnerabilities and corruption risks.

The US government suggested ways to improve Zimbabwe’s fiscal transparency such as: “Publishing its enacted budget within a reasonable period of time; publishing information on contingent debt and state-owned enterprise debt; eliminating off-budget accounts; providing a complete picture of revenues and expenditures, including revenues from natural resources; detailing allocations to and revenues from state-owned enterprises in budget documents.

“Making full audit reports for major state-owned enterprises publicly available; allowing greater parliamentary oversight over the intelligence budget; improving the reliability of budget estimates; following in practice laws and regulations governing natural resource extraction contracting and licensing; and making basic information about such awards publicly available.”