GOVERNMENT incurred a $218 million budget deficit in the first half of the year as expenditure soared more than revenue generated further pushing pressure on the ailing economy.
In his mid-term fiscal policy review yesterday, Finance and Economic Development minister Patrick Chinamasa said cumulative revenue collections for the period January-June 2014 amounted to $1,735 billion, against a target of $1,847 billion, resulting in a shortfall of $112 million or 6,1% of total projected revenue.
Chinamasa said government expenditure for the first half of 2014, inclusive of loan repayments amounted to $1,953 billion.
This was against targeted expenditures of $1,848 billion.
Chinamasa said the expenditure profile for the first half of the year was not in tandem with planned expenditures, mainly on account of support to additional employment costs and loan repayments.
Employment costs, which were originally targeted at $1,410 billion constituting 72,8% of total expenditures for the period January-June 2014, expended to $1,486 billion or 76,1% of total expenditures, surpassing the target by $75,2 million.
Chinamasa’s predecessor Tendai Biti had popularised the cash budgeting system saying the nation should “eat what it had killed”.
He attributed the revision to under-performance of mining and manufacturing.
The slowdown in gross domestic product (GDP) growth, Chinamasa said was also reflected in reduced revenue collections, depressed exports and imports.
In a letter of intent to the International Monetary Fund, Zimbabwe projected a real GDP growth for 2014 of 3,1% reflecting among other factors, continuing low business and investment confidence, scarce liquidity, and subdued international prices for our major exports.
Chinamasa said the multicurrency regime, introduced in 2009, was here to stay and the pronouncement on special coins was to buttress the system.
He said he was working on a debt strategy to be presented to Cabinet in a fortnight on how the country would resolves its $8,8 billion total debt.
The debt has debilitated the country’s efforts to secure funding from bilateral and multilateral institutions to reboot the economy.
“Debt distress has continued to undermine the economy’s capacity to meet debt servicing obligations, resulting in the accumulation of external payment arrears since 2000,” Chinamasa said.
Chinamasa said although government has been implementing a tariff regime that endeavours to balance the sustainability of our balance of payments and support the competitiveness of the local industry, imported goods, however, continue to surge, amounting to about $3 billion for the period January to June 2014.
He said the bulk of the imports are finished products, most of which are already produced locally.
These include cooking oil, poultry, soap, maize meal, flour, beverages, dairy produce, furniture, sugar, fresh and canned fruits and vegetables, among others.
“The influx of imports, thus, continues to undermine growth
of the agricultural sector and recovery of the local industry,” he said.
Chinamasa said government would come up with measures to incentivise exporters saying his 2015 national budget would contain a cocktail of measures to enhance competitiveness for the export sector.