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Business Reporter
THE Zimbabwe economy got off to a strong start in 2025, with a significant boost from agriculture and mining sectors.
This robust performance helped the Government to collect an impressive US$1,74 billion in revenue during the first quarter, comfortably exceeding its target of US$1,54 billion by over US$207,3 million.
This positive outcome was largely due to abundant rainfall, which invigorated agriculture; and exceptionally high international prices of gold that bolstered the mining industry. These favourable conditions were further supported by a stable macroeconomic environment, a direct result of the nation’s strict fiscal and monetary policies.
Despite the positive domestic outlook, the 2025 first quarter bulletin from the Ministry of Finance, Economic Development and Investment Promotion highlighted ongoing global economic uncertainties.
Geopolitical tensions, the imposition of tariffs and the withdrawal of development assistance were cited as external challenges that could potentially impede Zimbabwe’s desired economic growth and fiscal sustainability.
In local currency terms, cumulative revenue collections for the first three months of 2025 reached ZiG46,7 billion, with expenditures standing at ZiG45,2 billion, leading to a budget surplus of ZiG1,6 billion. Tax revenue constituted a lion’s share of total collections, amounting to ZiG44,8 billion, or 95,9 percent.
Value-added tax (VAT) was the leading contributor, at 27,1 percent; followed by personal income tax, at 21,4 percent; excise duty, at 10,7 percent; and corporate tax, at 8,5 percent.
On the expenditure front, total outlays during the quarter under review amounted to ZiG45,2 billion. Recurrent expenditures, primarily employment costs and Government operations accounted for ZiG34 billion, while capital expenditures reached ZiG11,2 billion.
Of the capital expenditure, infrastructure development projects absorbed ZiG5,4 billion, approximately 48,7 percent of the total.
The report also noted that ZiG1,5 billion was allocated to social assistance programmes to support vulnerable members of society, with interest payments amounting to a further ZiG1,5 billion, of which 80,1 percent was directed towards servicing domestic debt.
Domestic debt repayments for the first quarter totalled US$201,0 million and ZiG944,7 million.
According to Trigrams Investments analyst Mr Wafa Kuchera, “The continued discipline by the fiscal authorities is starting to pay dividends on the expenditure side, leading to positive outturns.”
“With better expenditure planning and a reining in of rogue projects through the ‘Value for Money’ initiative, we are likely to see more resources saved and directed to much-needed infrastructure. On the revenue side, much has been done to widen the tax net and enforce compliance through Zimra (Zimbabwe Revenue Authority),” said Mr Kuchera.
“The dominance of VAT is a testament to the benefits of the digitisation process through TARMS (Tax and Revenue Management System), which now captures and validates all VATable invoices across the economy.”
He added: “There is a clear structural shift that is underway within the economy and all areas that show improvement or growth need to be protected and supported to ensure that those gains are not lost to poor policymaking or aggressive enforcement action from the Government, as has happened before.
“With currency stability now widely accepted, growth should now be the focus, with the Government facilitating access to new markets and especially to capital.”
Economic analyst Mr Kuda Mugova attributes the strong revenue collection in the first quarter to several positive developments.
He notes the robust performance that occurred during what is typically a slower period points to either a more efficient tax authority or “underlying strength in economic activity”.
Mr Mugova suggests a more predictable policy environment and the stability of the Zimbabwe Gold (ZiG) exchange rate have been key factors. He explains that the currency’s longest stable period since its introduction has given businesses and individuals “greater confidence” to plan and commit to long-term investments.
Looking forward, Mr Mugova is optimistic. He believes the strong first quarter has set a solid foundation for the rest of the year. He points to recovering prices of platinum group metals (PGMs) and firm gold prices as likely drivers of even higher revenue collections in the coming quarters.
He also highlighted the strong agricultural rebound, particularly in the tobacco industry, as a key contributor to the positive economic outlook. He praised the Government for its fiscal discipline, stating that Treasury “deserves commendation for maintaining fiscal discipline, achieving a modest budget surplus by aligning expenditure strictly with available revenues”.
This prudent approach, he says, has been critical in supporting the local currency and managing inflation.
Meanwhile, the country’s external sector concluded the first quarter of 2025 with a current account surplus of US$19,9 million, a positive, albeit reduced, figure compared to the preceding quarter.
This surplus was primarily sustained by resilient remittances and robust gold receipts, according to preliminary estimates from the Ministry of Finance, Economic Development and Investment Promotion; and the Zimbabwe National Statistics Agency (ZimStat).
However, the overall surplus was somewhat dampened by deficits recorded in the trade balance, and services and primary income accounts. The merchandise trade balance, while showing a 29,3 percent improvement to US$543 million compared to the first quarter of 2024 worsened by 42,1 percent on a quarter-on-quarter basis.
This deterioration in the trade balance was largely attributed to subdued international prices for PGMs and weaker production of key mineral exports, including diamonds, nickel, chrome and lithium.
Concurrently, imports also saw a decline, particularly in fuels, machinery, vehicles and electricity. The sharper contraction in exports during the quarter ultimately outweighed the decrease in imports, thereby widening the trade deficit.
Online Reporter