adminmillion of which recurrent expenditure accounted for 93,3 percent of total expenditure at US$672,86 million, while capital expenditure accounted for the remaining 6,7 percent.
Recurrent expenditure consists mainly of expenditure on wages, salaries and supplements, purchases of goods and services and consumption of fixed capital (depreciation).
Thus there has been very limited investment in new projects, especially infrastructure, that are required to drive sustainable economic growth.
The negative trend, which emerged in line with the introduction of the multi-currency system in 2009, is however expected to continue in the outlook period as there has been little done in streamlining Government expenditure, for instance, by way of deflating a high civil service wage bill.
The African Development Bank expressed similar concerns in its latest Zimbabwe monthly economic review.
“The country’s wage bill remains the major challenge that authorities need to deal with it as this accounted for 58,6 percent of the recurrent expenditure and 54,6 percent of total expenditure at US$394,12 million during the first three months of 2012.
“Addressing the wage bill, including implementing the Civil Service Payroll Audit results could help free resources for growth enhancing capital projects,” said the bank.
Observers note that the skew towards recurrent expenditure is a worry since a number of indicated infrastructure projects have stalled on lack of finance.
Deterioration of the country’s critical infrastructure has resulted in severe adverse economic and social effects that are currently stifling the country’s economic recovery prospects.
The current huge infrastructure deficit is proving to be the leading binding constraint in achieving quick economic recovery and this is most apparent in the electricity sector.
Zimbabwe currently produces around 1 300 megawatts, while suppressed demand stands at just over 2 200MW.
Although the country also imports electricity from Mozambique, it may now need to urgently buttress its internal supply. This follows reports from Mozambique that its own electricity generating capacity is likely to remain constrained at 2200MW until 2020, while it is also facing an average annual growth rate of 15 percent in electricity demand. The AfDB says this will likely have serious implications on Zimbabwe as Mozambique may reduce its exports of electricity to neighbouring countries to meet its own growing domestic demand.
Online Reporter