Treasury projects 6% GDP growth for 2025

Non-wage expenditures will account for the residual ZiG49,4 billion or 17,9% of total expenditures.

ZIMBABWE’s economy is expected to grow by 6% next year as it recovers from the adverse effects of an El Niño-induced drought and prolonged power outages, Finance minister Mthuli Ncube (pictured) said yesterday.

This year, the economy is expected to grow by 2%.

In line with the projected GDP growth, revenue collection is estimated at ZiG270,3 billion (19,6% of GDP), comprising ZiG218,2 billion tax revenues and ZiG52,1 billion non-tax revenues.

In US dollar terms, the fiscal framework translates to a GDP of approximately US$38,2 billion, revenues of US$7,5 billion and expenditures of US$7,7 billion, according to Ncube.

“This takes into account the existing tax policy regime, supported by enhanced revenue administration measures to reduce leakages, as well as additional measures aimed at widening the tax base,” Ncube said while presenting the 2025 National Budget in Harare yesterday.

“The attainment of projected economic growth will result in Zimbabwe being one of the fastest-growing economies in the region next year.”

Expenditure is seen at ZiG276,4 billion, resulting in a budget deficit of ZiG6,1 billion.

“Zimbabwe heavily relies on mining to generate foreign currency, especially from base metals. As we move into 2025 and 2026, a combination of global inflation and geo-political risks are expected to support further firming of gold prices,” he said. 

The minister said a significant portion of the recurrent expenditure budget, amounting to ZiG236,8 billion (85,7% of total expenditures) would be expended on public service compensation, which is 55,2% of total expenditure.

Non-wage expenditures will account for the residual ZiG49,4 billion or 17,9% of total expenditures.

Growth in the mining sector is expected at 5,6% in 2025.

In the outlook, the sector is expected to maintain the growth momentum, with 2026 and 2027 expected to register 5,5% and 5% growth, respectively.

“This growth is mainly due to favourable international mineral prices, especially for gold, and improved power supply situation,” he said.

The agriculture sector is projected to recover from a forecast 15% contraction in 2024, to grow by 12,8% in 2025.

The rebound of the sector is largely attributed to the anticipated La Niña weather phenomenon, which typically brings normal to above-normal rainfall.

The manufacturing sector is expected to grow by 3,1% next year, driven by increased agricultural output, which will stimulate agro-processing industries, particularly in the drinks and beverages sub-sector.

The tourism industry is seen registering a 4,3% growth, benefiting from enhanced visa facilitation, investments and international events.

Ncube acknowledged that the 2025 budget fell short of matching bids submitted by various ministries and government departments.

“The 2025 budget allocation for operational support to ministries, departments and agencies (MDAs) reflects the constrained fiscal space and will not be able to match the budget bids as presented by the various MDAs.

“Nevertheless, the allocation for 2025 should facilitate the implementation of priority high-impact programmes and projects that stimulate economic development and reduce outlays on consumptive expenditure.”

From the expected revenue inflows, Ncube added, ZiG40,6 billion will be channelled towards infrastructure development, vehicle procurement and capitalisation of public entities, among other priorities.

The Treasury boss admitted that the capital outlay was not sufficient, considering Zimbabwe’s infrastructural deficit.

“The resources earmarked for the development budget are less than ideal to address the huge infrastructure backlog, required to unlock the productive capacity of the economy, hence the need to leverage private sector financing, especially for commercially viable projects which generate cash flows,” he said.

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