adminthe realisation of revenues.
In its monthly report for September 2011, the African Development Bank said the 2012 budget outcome would depend on how realistic the projected increase in revenues was and its impact on Government’s wage bill.
“The asymmetry in the expenditure and revenue projection is underpinned by the fact that while a significant portion of projected expenditure would definitely materialise, the revenue projections may not,” read part of the report.
Finance Minister, Tendai Biti in his Budget Strategy Paper (BSP) said revenue-to-GDP ratio would grow from 30 to 34 percent, on account of ongoing tax reforms.
Tax reforms are focusing on the restructuring of the Zimbabwe Revenue Authority, compliance initiatives and increased automation of the tax collection system, among others.
During the period under review, Valued Added Tax and Pay As You Earn contribution to total revenue are expected to remain largely unchanged, with improvements in the share of Customs and Excise duties as well as non-tax revenue anticipated.
No significant amount from co-operating partners is also anticipated during the overall period outlook.
It is estimated that about US$500 million will come from co-operating partners.
The African Development Bank says should only a fraction of the projected revenue increase for 2012 materialise, the wage bill could consume over 70 percent of Government revenue.
“Ultimately, as the BSP notes, it is critical that measures aimed at making the wage bill sustainable are adopted, including the implementation of the results of the payroll and Skills Audit,” said AfDB.
The bank added that sustainability of the wage bill also required a major increase in real Gross Domestic Product growth.
But the BSP has recognised the important role of addressing critical infrastructure requirements in areas such as energy, water, transport and ICT.
But the AfDB said the quantum of investments required to address the infrastructure bottlenecks would depend on addressing the external debt and uncertainty relating to investment.
Zimbabwe requires about US$14 billion for infrastructure development to operate at optimum levels.
The size of the Zimbabwe external debt at over US$7 billion has become a serious development constraint for the economy.
With the continued build-up in external arrears, the low level of external debt implies that the country is now in debt distress and cannot leverage new financial support.
The economy cannot also sustain any new non-concessional borrowings.
Online Reporter