Mthuli Ncube’s mid-term budget review avoids supplementary budget, declares $800 million surplus
THE mid-term budget review statement unveiled by the Zimbabwe government Thursday did not allocate any additional financial allocations to government ministries despite increasing inflation which has eroded the initial budget.
The development comes at a time when citizens were expecting Finance Minister, Mthuli Ncube to avail additional funds.
However, Ncube said Ministries had on average utilised 46% of their votes as at June 2020.
“This also implies that 54% of the original 2020 budget remains unutilized and it enables us to operate to the end of the year as we reallocate to cover the critical needs, especially those related to COVID-19 and social protection.
“This position enables us to avoid tabling a Supplementary Budget, given our current levels of spending,” he said.
Zimbabwe’s annual inflation was estimated to be around 400 % in November 2019 when Ncube unveiled the initial budget.
However, latest statistics shows that inflation currently stands at 786% indicating that the value projected then has since been eroded therefore justifying the need for supplementary allocations.
Ncube also said that inflationary pressures which subsided in the last quarter of 2019 and in January 2020, resurged from February 2020 to June 2020.
“However, inflation is expected to gradually decline in the second half of 2020, from the peak of 785.5% in May 2020, to 300% in December 2020, responding to current monetary and fiscal policy interventions,” he said.
The treasury boss said the projected annual inflation is consistent with reducing the month-on-month inflation from around 31.7% in June 2020 to about 5% in the last quarter of 2020.
Total expenditures disbursements to June 2020 amounted to ZW$30 billion.
Resultantly, for the period January to June 2020, a budget surplus of around ZWL$800 million has been realised.
“Therefore, a combination of Government and external development support in mitigation the COVID-19 pandemic is expected to alleviate deeper contraction of the economy to a projected -4.5% GDP growth in 2020, against the initial Budget projection of 3% growth,” said Ncube.
The economy is, however, anticipated to recover to record GDP growth of about 7.4% in 2021 before moderating to around 5% thereafter.
Merchandise exports for the first five months of 2020 slightly declined by 2% to US$1.53 billion from US$1.56 billion, whilst imports declined by 4% compared to the same period in 2019. This resulted in merchandise trade balance improving by 16% from a deficit of US$403 million recorded during the same period last year.
He expressed optimism that the recently launched foreign currency exchange auction system will go a long way to stabilise the foreign currency needs.