A week after Finance minister Mthuli Ncube tabled his US$9 billion 2026 National Budget — triggering public fury over “punitive taxes” and what many view as massaged statistics meant to project a booming economy — Zimbabwe’s industries have issued a scathing warning: government is living large while the economy limps.
Business said the state has blown past its budgets in less strategic areas, overseen glaring inconsistencies in fiscal management, and allowed avoidable leakages to fester at a time the tax base is narrow, fragile, and “overburdened”.
In a note to its members, the Zimbabwe National Chamber of Commerce (ZNCC) said large variances in vote utilisation, unverified outstanding payments, and repeated late contractor payments pointed to “systemic weaknesses in budget execution, procurement and cash management”.
The criticism comes as long-standing public finance concerns resurface — from costly foreign travel by senior bureaucrats to unchecked expenditure in offices that should be leading restraint.
Last week, Ncube projected 5% GDP growth next year. But analysts told the Zimbabwe Independent growth could be significantly higher if the state stopped throwing money at non-essential ministries, while strategic sectors struggle.
“By September 30, 2025 MDAs (ministries, departments and agencies) had utilised, on average, 56% of allocations,” the ZNCC said.
“But when adjusted for exchange rate outturns the utilisation rises to 75%. Certain MDAs show extreme overutilisation: Transport 267%, Office of the President and Cabinet 124%, National Housing and Social Amenities 166%.”
Yet ministries central to economic revival remain underfunded.
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“Conversely, crucial economic ministries such as Industry and Commerce, as well as Foreign Affairs and International Trade used only 23% of their votes. The pattern is dysfunctional,” the chamber said.
It warned this combination — where some ministries burn through allocations unchecked while others cannot access basic capital — reflects “weak prioritisation and poor cash planning,” resulting in “ceremonial budgeting where appropriation ceilings no longer reflect real resource allocation during execution”.
The chamber wants Treasury to “immediately tighten” reallocation rules and force MDAs to submit revised cash-flow plans ahead of supplementary budget considerations. Parliament, it added, should enforce quarterly utilisation targets and impose remedial measures on underperforming and overspending ministries alike.
In detailed submissions, the ZNCC, the Confederation of Zimbabwe Industries (CZI), and securities firm Morgan & Co also tore into the government’s tax proposals, describing the combination of a lower Intermediated Money Transfer Tax (IMTT) for ZiG transactions, IMTT deductibility, and a higher Value-Added Tax (VAT) rate as a “poor policy mix” with “perverse” consequences.
The proposals include reducing IMTT on domestic ZiG transactions from 2% to 1,5%, allowing IMTT deductibility for Corporate Income Tax, and raising VAT by 0,5 percentage points. The IMTT on foreign currency transactions remains untouched at 2%.
The ZNCC argued the net effect would be a revenue windfall for Treasury, as over 80% of transactions are in US dollars, but at a heavy cost to households and businesses.
“Increasing VAT by 0,5% broadens the inflationary pass-through to households and firms and risks reversing tentative gains in disinflation,” it warned. Zimbabwe’s fragile disinflation path saw ZiG annual inflation drop to 19% in November from 32,7% in October.
VAT already accounts for 23,7% of revenue, meaning an increase would hit the poorest hardest. The chamber said IMTT deductibility merely shifts part of the tax burden to the fiscus without removing a distortion that “penalises digital, formal payments”, locking in informality and encouraging cash use.
The CZI said reliance on IMTT “promotes the greater use of cash and informality” and “risks weakening the medium-term revenue base”. It called for the immediate removal of IMTT, saying its costs to growth, competitiveness, and investment now exceed its usefulness.
Morgan & Co warned the tax shifts will squeeze formal retailers, depress margins into 2026, and fail to incentivise use of the ZiG.
“The perceived ‘punishment’ for transacting in US dollar will not outweigh the US dollar’s advantages,” it said, predicting further entrenchment of the shadow economy.
