Finance minister Tendai Biti yesterday painted a gloomy picture of Zimbabwe’s economic outlook blaming the underperformance of the diamond revenue for the stifled growth.
Biti said Treasury would in July revise downwards Budget estimates as proceeds from diamonds continued to trickle into the fiscus. He said his ministry would review the Budget in July during the Medium-Term Fiscal Policy Statement.
Government figures indicate that diamond revenues have been underperforming since January 2012, with only $30,4 million remittances received between January and March this year against a target of $122,5 million.
This means the $600 million revenue target from the gems announced by Biti during the 2012 Budget statement could be missed. The Finance minister said rising imported inflation driven by soaring prices of petroleum products could also push global food prices and worsen the cost of living.
“There are various downward risks to the economy during the second quarter and into the last half of the year,” Biti said in his monthly economic review.
“These include failure to realise our Budget revenue targets and reduced demand for our export commodities, with a negative bearing on overall gross domestic product growth.”
Cumulative revenue collections during the first quarter of the year, according to Biti, stood at $771,1 million, resulting in a negative variance of $98,6 million on the projected target.
Employment costs, which currently account for 70% of overall expenditure, continued to pile fiscal pressures on State coffers starving critical capital expenditures. Revenues inflows indicated Zimbabwe had remained a consumption-driven economy as value added tax contributed the bulk of government income followed by income tax and corporate tax respectively.
Despite subdued performance of the diamond mining sector, Biti said the entire mining industry continued to anchor total exports on the back of strong investment and firm prices on the international market. Gold output climbed to 1 135 kg in March from 1 081kg recorded during the previous month.
Chrome production on the downside dropped to 37 092 tonnes from 43 632 tonnes in March as the government considers lifting a ban on raw chrome ore.
Turning to agriculture, Biti said the resurgent tobacco sector was still expected to drive growth indicating that total contribution by agriculture remained achievable despite his plans to revise Budget projections.