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Nqobile Bhebhe, [email protected]

Finance and Economic Development Minister, Professor Mthuli Ncube has outlined an elaborate 2024 National Budget strategy that projects revenue collections to be $30,7 trillion against expenditures of $33,1 trillion, resulting in a budget deficit of $2,3 trillion as the economy is poised for 5,3 percent growth this year, much higher than the original projection of 3,8 percent.

The 2024 National Budget strategy running under the theme “Consolidating Economic Transformation” seek to scale up domestic resource mobilisation, deepen economic transformation and promote both domestic and foreign investment in support of programmes and projects that will deliver on the National Development Strategy 1 priorities.

NDS-1 is the Government’s economic blueprint running from 2021 to 2025 and is anchored on devolution, decentralisation and prudent use of national resources for the benefit of all citizens.

It is the second step in the Second Republic’s thrust to attain an upper middle-income economy by 2030 and is a successor to the Transitional Stabilisation Programme.

This year marks the midpoint in the implementation of NDS1, the second of three successive Government national development plans aimed at achieving the country’s Vision of an Empowered and Prosperous Upper Middle-Income Society by 2030.

Government undertook a Mid-Term Review of NDS1 during the period March-June 2023, which provides an update on NDS1 implementation during the first-half, highlighting progress and gaps as well as strategies of accelerating progress towards the full realisation of NDS1 objectives during the remaining period of the Strategy.

The 2024 Budget Strategy Paper (BSP) has been formulated in accordance with the prescribed budget process calendar.

Minister Ncube said its presentation is meant to deepen stakeholder engagements and consensus on the priorities for the 2024 National Budget.

The Second Republic has presided over the implementation of meaningful and toughest fiscal consolidation measures and reforms thereby creating the foundations for durable macroeconomic stability and sustainable growth going forward.

Prof Ncube noted that through an infusion of various economic strategies, the country has managed to reverse declining growth trends before the NDS1 period, achieving growth rates of -7,8 percent, 8,5 percent, 6,5 percent for 2020, 2021 and 2022 respectively.

The economy, he said, is now poised for 5,3 percent growth during 2023, much higher than the original projection of 3,8 percent.

“Growth in the medium term is expected to remain strong underlined by positive performance in most of the productive sectors of the economy,” said Prof Ncube.

He indicated that strong agricultural output has resulted in record tobacco output during the 2023 marketing season which is now at 292 million kilogrammes as at 21 July 2023.

The marked improvement has surpassed the previous record of 259 million kgs recorded in 2019 and follows on record wheat output of 375 000 tonnes achieved last year.

“With most of the output being delivered by smallholder farmers, this positive growth is transforming lives and livelihoods throughout the country. Equally transformational is Government’s thrust to fully exploit, value add and beneficiate the country’s mineral resources, which is being felt through increased investments, production and exports.

“Transforming the economy is expected to accelerate long term growth and overall competitiveness of the economy, enhance industrialisation and value of export receipts, broaden sources of local content, and create opportunities for decent jobs,” said Prof Ncube.

Minister Ncube said while revenue collections are projected at $30,7 trillion against expenditures of $33,1 trillion, there are risks which may emanate from reduced tax compliance and transfer pricing, particularly in mining.

“This risk is further compounded by rising dollarisation, which is shrinking the tax base and promoting informalisation. Full dollarisation has the potential to reduce the taxable base by almost 25 percent.

“In order to mitigate the impact, Government is implementing measures to boost the use of the Zimbabwean Dollar in domestic transactions,” he said.

Prof Ncube said 2024 total revenue collections are projected at 19,2 percent of GDP broken down as tax receipts accounting for 95 percent of total revenue and non-tax revenue contributing the balance of five percent.

He said achieving the target collections is underpinned by tax administration initiatives that enhance enforcement and tax compliance, in particular, of business processes and adoption of new technology, among other initiatives.

“Expansion of the base through embracing emerging industries, including those in the informal sector, as well as capturing the digital marketplace where sellers and buyers of goods and services converge through e-platforms will ensure that eligible taxpayers contribute towards national development.

“Zimra has also taken stringent measures to curb revenue leakages through corrupt activities. Furthermore, consistent with reforms to contain tax expenditures and minimise leakages, Government is prioritising review of concessions and contracts that undermine revenue collections as well as adjust fees, levies and charges in line with the cost recovery principle.”

On expenditure, the medium-term expenditure framework is anchored on ensuring that expenditures are limited to available resources and the fiscal deficit maintained at sustainable levels of below three percent of GDP.

The wage bill, he said, while accounting for the largest share of public expenditures, still has to content with emerging issues such as wage compression, gaps in service delivery for critical social sectors of health and education, skills flight, low remuneration levels arising from the loss of value of the local currency and devolved functions of Government, among other issues.

“In order to ensure a fit for size public sector, the 2024 Budget will support the move towards a single spine salary structure, benefiting from the current job evaluation exercise which should inform the harmonisation of the public sector remuneration framework.

“Furthermore, retention schemes for critical staff will be maintained, including implementation of non-monetary benefits to the public service.”

Minister Ncube said having entrenched performance management within the public sector, the next step is to deepen the linkage between performance contracts and resource allocation in order to enhance delivery of public services supported by the Monitoring and Evaluation units already established.

He said the goal towards economic transformation is premised on moving the economy from low to high productivity activities within and across all sectors of the economy, increase export diversification and participation in global value chains, particularly for mining and agriculture.

“This will significantly enhance export performance and contribute to sustainable economic growth and the creation of quality jobs, noted Prof Ncube.

He said in this regard, the 2024 Budget will focus on bold measures to sustain this policy thrust, with structural reforms being implemented that engender macroeconomic stability.

“These include scaling up investments in infrastructure that will ensure provision of critical enablers to the economy, ease of doing business reforms that facilitates private sector led growth and improvements in access to inclusive social protection programmes and other public services for the needy,” said Prof Ncube.

He said Government will continue to explore alternative financing options to complement budget resources in order to meet NDS1 requirements.

Infrastructure investment has markedly increased, largely using own domestic resources as external sources remain inaccessible given the country’s external debt arrears position.

To that end, Prof Ncube said to meet the ever-increasing demand for infrastructure services from a growing economy, there is need to mobilise new financing resources into this sector that are sustainable and long term, in order to minimise the negative impact of budgetary resources on macro-economic stability.

However, he noted that in spite of the positive economic outlook, the economy still faces some risks, mainly arising from price and exchange rate volatility, which complicates policy choices between stability and growth.

Therefore, containing exchange rate volatility and domestic inflation pressures remains an overriding objective of Government as it engenders market confidence, investment and competitiveness of the economy.