High expectations for the 2025 national budget

IN the coming weeks, Finance, Economic Development and Investment Promotion Minister, Professor Mthuli Ncube will unveil the 2025 national budget, his sixth overall.

As with previous budgets, there are high expectations for the forthcoming budget to effectively address a wide array of pressing issues.

Critical areas of focus will encompass revisions to tax brackets, adjustments to bonus thresholds, measures aimed at ensuring currency stability, solutions to energy and water challenges, as well as funding allocations for health and education and enhancements to transportation infrastructure.

All these issues, among others, will be subject to comprehensive analysis by economic observers and members of the public.

The national budget is of paramount significance as it sets the framework for the country’s economic trajectory and profoundly influences the welfare of its citizens.
Every year, the business sector and the general populace are provided the opportunity to articulate their expectations regarding the national budget’s outcomes.

These insights are aggregated through a series of public meetings organised nationwide by the Parliamentary Portfolio Committee on Finance and Economic Development.

Following these consultations, the committee prepares an extensive report for submission to the Minister of Finance, equipping him with critical points for consideration in the fiscal statement’s formulation.

Public consultations frequently uncover the authentic challenges encountered by individuals and organisations in specific regions.

Typically, constituents expect that all recommendations will be thoughtfully considered; thus, they often experience disappointment when their perspectives are not fully acknowledged.

During a recent pre-budget seminar, Professor Ncube addressed parliamentarians in Bulawayo, indicating that Treasury had attentively considered various policy recommendations and suggestions.

He articulated that Treasury values all contributions and would take them into account, expressing appreciation for the legislators’ understanding of the challenges posed by limited fiscal space within Treasury.

“I take note of the recommendation for the need to ensure that the 2025 National Budget responds to the need to alleviate poverty and for an equitable budget that strikes a balance between the needs of different segments of society like those who live in rural and urban developments, women and youth as well as responsive to needs of people with disabilities in line with the Government thrust of ‘leaving no one and no place behind,’” said the minister.

Regarding the constraint of limited fiscal space, he noted that nearly all committees and ministries had expressed concerns over the insufficient disbursements, which have become a persistent challenge.

He highlighted that the current financial situation is difficult due to a misalignment between revenue and expenditure.

However, the issue can be addressed through enhanced collaboration between Treasury and line ministries, particularly during the release of budgets and the development of payment schedules, he stated.

“The total bids for the 2025 National Budget are over ZiG700 billion against budget envelope shared through the second budget call circular with a ceiling of ZiG140 billion. That is five times the ceiling of 18 percent of GDP. Let me inform the House that the second Budget Call Circular was issued before depreciation of the domestic currency. Therefore, we are updating the fiscal framework to take into account the new changes, which will allow an upward review of ceilings.”

The four-day workshop was held under the theme, “Building Resilience for Sustainable Economic Transformation”.

The gathering served as a crucial platform for lawmakers to engage with industry experts and stakeholders to forge actionable plans aimed at aligning with the nation’s economic recovery goals.

Zimbabwe expects to become an upper middle-income economy within the planned period for the National Development Strategy 2 (NDS2) (2025-2030), the successor to NDS1.

In simpler terms, an upper middle-income economy translates to an improvement in the lives of ordinary citizens, especially with regard to the purchasing power of their salaries, what they eat, service delivery and quality of healthcare and education, among other key factors.

With the economy now expected to record a two percent growth this year, down because of the severe drought from the initial forecast of 3,5 percent, Treasury is expecting a rebound next year of six percent on account of agricultural sector recovery.

During various presentations, areas of keen interest included service delivery, health, education, taxes and salary adjustments.

The chairperson of the Portfolio Committee on Budget, Finance and Investment Promotion, Cde Clemence Chiduwa said the public applauded the government for introducing the Zimbabwe Gold currency.

However, he said, “Disappointment was expressed over the devaluation of the currency mainly driven by speculative tendencies. They encouraged the government to take a bold stance in formulating policies and regulations that strengthen the use of the local currency as well as creating its demand locally.

“Participants from the southern region of the country, emphasised their lack of understanding about the functionality of the ZiG, particularly exchange rates, which hinder its use as a currency for trade in the respective areas.”

Professor Ncube expressed his views on the enhanced utilisation of the ZiG for the acquisition of essential goods and services, including fuel and various government services.

He reiterated the government’s commitment to the de-dollarisation strategy and confirmed that steady progress is being made towards achieving full currency sovereignty in the future. This plan encompasses an increase in the actual circulation of notes and coins, he said.

Cde Chiduwa further emphasised that the public had clearly communicated a pressing need for the government to allocate additional funding to address the ongoing power shortages in the country, which are significantly hindering structural transformation and the industrialisation agenda.

It has been recommended that solar energy farms be prioritised for integration within the industrial and agricultural sectors through Public-Private Partnerships.
Moreover, in addition to the challenges posed by climate change, the ongoing power shortages have been associated with the expansion of the country’s manufacturing industry.

This growth has led to an increased demand for energy, further driven by the Second Republic’s re-engagement efforts, which have attracted significant investments in the mining and infrastructure development sectors.

Energy is a key enabler to the acceleration of the country’s modernisation and industrialisation agenda as well as sustainable socio-economic growth.

To address perennial power shortages in the country, the Government is undertaking several electricity generation projects, most of which are funded by extra-budgetary funds, loans, and the private sector.

In line with NDS1, providing reliable and low-cost energy access is in line with the Government’s intention to provide economic growth and stability.

“The public recommended utilising locally available dams by installing hydro power plants, Batoka hydro power project, Bangala Dam hydropower project, Tokwe-Mukorsi Dam hydropower project, and Gwayi Shangani Dam hydropower,” said Cde Chiduwa.

The Parliamentary Portfolio Committee on Energy and Power Development reported that the sector is significantly impeded by delays in the disbursement of project loan repayments, particularly those related to the China Exim Bank. Additionally, the high level of debt and the limited credibility of the Zimbabwe Electricity Transmission and Distribution Company (ZETDC) as an off-taker, stemming from sub-economic tariffs and inadequate revenue collection, further exacerbate the situation.

The presentation highlighted that delays in cash releases for payments to contractors for completed work, challenges in securing foreign currency for the importation of essential machinery, equipment, and materials, as well as elevated debt levels, are adversely impacting the sector.

Furthermore, the committee noted the ongoing issues of exchange rate volatility and rising prices as additional challenges.

“The project budgets were eroded by inflation and exchange rate depreciation as the projects are denominated in United States dollars while the budget is denominated in ZWL,” reported the committee.

The elevated cost of borrowing, attributed to perceived country risks associated with Independent Power Producers (IPPs) and state utilities, was identified as a significant concern.

The Finance Minister reassured legislators that the Government is actively supporting IPPs while also mobilising resources to invest in the establishment of new power stations.

There is prevailing optimism among Zimbabweans regarding increased budget allocations for the health sector, aimed at strengthening the country’s response to public health challenges.

Recommendations have been put forth for the rehabilitation of all district hospitals nationwide, alongside the procurement of essential supplies, including blankets, beds, and medical consumables.

It has been proposed that clinics be established in each ward across the country to minimise the travel distance for many individuals, which often exceeds five kilometres.

Furthermore, women have underscored the necessity for the government to provide free maternity services at all district hospitals.

Education is pivotal for the development of any nation, and the 2025 budget is anticipated to allocate resources for enhancing educational infrastructure, improving teacher training programs, and ensuring access to quality education for all.

The Primary and Secondary Education Committee highlighted a deficit of approximately 3 000 schools in the country and estimates that around two million children are currently out of school.

Additionally, the committee noted that there are 1 900 satellite schools nationwide that require registration upon meeting minimum functionality standards.
To tackle these challenges, the committee has proposed several domestic resource mobilisation strategies.

These include collaborating with partners to secure resources through School Improvement Grants, engaging the private sector in Public-Private Partnerships (PPPs) for school construction, and generating funds through levies collected from the proposed Education Development Fund to support the development of public school infrastructure.