$58,2 trillion budget unveiled President Mnangagwa and his two Vice-Presidents Constantino Chiwenga and Kembo Mohadi follow proceedings during the 2024 National Budget presentation in Mt Hampden yesterday (Picture by Innocent Makawa)

Nqobile Bhebhe, [email protected]

FINANCE, Economic Development, and Investment Promotion Minister, Professor Mthuli Ncube, yesterday announced a $58,2 trillion National Budget for 2024 in which he raised tax and bonus tax-free thresholds in a bid to provide the much-needed relief to ordinary Zimbabweans whose incomes have been eroded by inflation.

Presenting the budget in Parliament in Harare, where he broadly reflected on the Government’s commitment to consolidate economic gains achieved so far under the Second Republic, as well as entrenching sustainable future stability, Minister Ncube said the proposed new tax thresholds would be effective from January 1, 2024, while the bonus tax-free threshold would take effect from November 1, 2023.

Anchored on “Consolidating Economic Transformation,” the 2024 National Budget builds on socio-economic achievements that have been made over the past five years and seeks to position Zimbabwe on a solid foundation for further development and growth.

Prof Ncube said the proposed expenditures framework takes into account the need to maintain the purchasing power of civil service salaries, ensuring the provision of core social services that benefit the poor and sustaining maintenance and rehabilitation of Government infrastructure.

He said the budget would also prioritise support to the ongoing capital infrastructure projects, non-accumulation of arrears, and increase funding of infrastructure projects through Public Private Partnerships (PPPs).

Under the proposed changes, Prof Ncube said the monthly tax-free threshold would be increased from $500 000 to $750 000, resulting in an annual tax-free threshold of $9 million.

Minister Ncube also proposed to adjust the tax bands, with the highest tax rate of 40 percent applicable to annual income exceeding $270 million. Regarding the local currency bonus tax-free threshold, he proposed to increase it from $500 000 to $7,5 million.

Minister of Finance, Economic Development and Investment Promotion Professor Mthuli Ncube arrives at the Parliament Building in Mt Hampden to present the 2024 National Budget yesterday

The minister said the Government is committed to playing its role of providing an enabling environment, through ease of doing business reforms, investment in public infrastructure, and provision of effective public institutions.

He said bids submitted from ministries were worth over $110 trillion, against the available envelope of $58,2 trillion.

“The envelope is limited by the sustainable revenue to Gross Domestic Product ratio of about 18 percent, which has been allocated to Ministries, Department and Agencies,” said Prof Ncube.

Amid the unforeseen global and localised headwinds, he noted that consolidating the economic transformation was a key task and is already underway to ensure that the benefits accrued to every Zimbabwean in line with the spirit of leaving no one and no place behind.

“Change is inevitable but the transformation is a choice. Therefore, while we celebrate the successes recorded so far, there is still a lot of work ahead of us to consciously implement transformational economic policies, which have a positive impact on the majority of citizens, especially the poor and the marginalised societies,” said Prof Ncube.

“The desired economic transformation is a responsibility of all stakeholders, especially Government, business and labour, with each playing their critical role.”

Prof Ncube said next year’s budget was guided by the need to maintain a sustainable budget deficit within the SADC’s macro-economic convergence threshold of not more than three percent of GDP.

Underpinned by broad assumptions that include normal to below normal rainfall season due to the El-Nino effect, slowdown in global economic growth amid geo-political tensions, declining international commodity prices, Prof Ncube said the continued use of the multicurrency regime, and tight fiscal and monetary policies will be maintained.

He projected a modest economic growth of 3, 5 percent, with total revenue collections for 2024 estimated at $53,9 trillion, which translates to 18,3 percent of GDP. Tax revenue is projected to be $51,2 trillion and $2,7 trillion in non-tax revenue.

“Guided by the expected revenue envelope and the desired fiscal path, expenditures in 2024 are projected at $58,2 trillion (19, 8 percent of GDP),” said Prof Ncube.

“The total budget financing gap amounts to $9,2 trillion, comprising of budget deficit of $4,3 trillion (1, 5 percent of GDP) and amortisation of loans and maturing Government securities estimated at $4,9 trillion. The deficit will be financed through domestic and external borrowing.”

Meanwhile, the minister said the domestic economy is projected to grow by 5,5 percent this year, a slight upward review from the August projection of 5,3 percent, on account of better-than-expected output in agriculture, in particular, tobacco, wheat, and cotton.

He, however, said economic growth is expected to slow down to 3,5 percent, mainly owing to the anticipated impact of the El Nino phenomenon being forecasted for the 2023/24 summer cropping season on agricultural output, as well as declining mineral commodity prices attributable to the global economic slowdown.

Fiscal restraint and tight monetary policy, together with a healthy current account position, provide the necessary conditions for currency and price stability, he added.

To that end, Prof Ncube said the Central Bank will target a month-on-month inflation rate of less than three percent throughout 2024.

He noted that domestic prices have relatively been stable since the third quarter of the year, as reflected by month-on-month inflation, which declined from 12,1 percent in June 2023, to 4,5 percent in November 2023.

In the outlook, annual inflation is expected to remain relatively stable and is projected to end the year 2023 slightly below 20 percent. In 2024, annual inflation is anticipated to end the year between 10 percent to 20 percent reflecting continued tight monetary and fiscal policies.

During the first nine months, Prof Ncube said the fiscal deficit stood at $0,9 trillion, and is projected to end the year at $1,4 trillion, which is 1,2 percent of GDP to be financed through domestic and external borrowing.

At the end of September, the Total Public and Publicly Guaranteed (PPG) debt stock stood at US$17,7 billion, of which external debt amounted to US$12,7 billion and domestic debt of US$5 billion.

Prof Ncube said in 2024, despite the softening of commodity prices of key minerals such as gold and PGMs, exports are projected to remain on the increase sustained by growth in output from lithium, coke and tobacco to US$7,7 billion.

He noted that remittances are projected to continue driving the current account surplus and are projected to close the year at US$2,1 billion, before rising further to US$2,2 billion in 2024.

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