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ZIMBABWE’S fiscal deficit is this year seen narrowing to below 0.5 percent of the country’s Gross Domestic Product from 2.4 percent recorded in 2014. The projection is based on improved revenue collections and rationalised government expenditure.
Between 1990 and last year, Zimbabwe has run successive budget deficits averaging 2.59 percent of its Gross Domestic Product (GDP) reaching a record low of 7.51 percent of GDP in 1992.
An online publication has reported that in a letter of intent to the International Monetary Fund signed by Finance and Economic Development Minister Patrick Chinamasa and central bank governor John Mangudya, the country said revenue shortfalls had made it difficult to achieve a balanced fiscal position.
Revenue collections for the first half of the year were nearly six percent behind the $1,76 billion target as the country endures widespread economic difficulties.
The difficulties were emanating from the shrinking corporate earnings, limited ability of companies to pay taxes on time, and rapid informalisation of the economy.
“A shortfall in revenue collection has intensified fiscal pressures, and has made expenditure rationalisation an urgent priority. Nevertheless, we intend to lower the primary deficit to below 0.5 percent of GDP and aim at a balance in 2016,” reads the letter dated September 30.
“We’re enforcing tax payments by agreeing with clients on repayment schedules to eliminate their overdue tax obligations”.
Cde Chinamasa and the Reserve Bank of Zimbabwe boss said the government was rationalising the country’s public service establishment in order to generate savings on employment costs.
Rationalisation of the public service establishment was also being implemented as the government sought cuts in lower priority current and capital expenditure while safeguarding priority social spending. — The Source.
Londile Moyo
Bongani Ndlovu