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NewsDay

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Govt continues to borrow despite low revenue: WB

Business
THE World Bank says government’s fiscal position in 2016 expanded by 8% points of the Gross Domestic Product (GDP), which shows continued borrowing despite not having revenues to match.

THE World Bank says government’s fiscal position in 2016 expanded by 8% points of the Gross Domestic Product (GDP), which shows continued borrowing despite not having revenues to match.

BY TATIRA ZWINOIRA

This comes as the World Bank’s second edition of the Zimbabwe Economic Update (WBZEU) released yesterday projected the economy to grow by 2,8% this year, which is slightly higher than the International Monetary’s Fund’s 2,7% projection.

In a statement made yesterday in Harare at the official launch of the WBZEU report, World Bank senior country economist, Johannes Herderschee said the bank had also done a public expenditure review (PER) and found that in the broader public sector, State-owned enterprises had become a major source of fiscal risk.

“The PER recommends extending similar levels of oversight, that are currently applied to National Budget, to all elements of broader public sector spending,” he said. “This would allow for a more coordinated fiscal policy and efficient use of government resources.”

Last week, Cabinet approved the Public Entities and Corporate Governance Bill which is currently being polished to be gazetted as legislation, which seeks to, among others, provide oversight over government expenditure.

The second edition of the WBZEU found that the burgeoning public sector wage bill contributed to increasing expenditures in 2016.

Finance minister Patrick Chinamasa told guests at the launch of WBZEU that government was moving to cut its runaway expenditure as they presented a paper to Cabinet last week on proposed cuts across all ministries last week.

“I need to say that last week I put a paper to Cabinet on cost cutting measures in line ministries. I have since put together a joint technical team comprising the Office of the President and Cabinet, my ministry and the Reserve Bank of Zimbabwe to look and come up with a framework on the basis of which we can see how we can reduce the cost of running those ministries,” he said.

“As well as coming with measures that can improve revenue generation where in fact the super intent is to have parastatals in the area of revenue generation. So it is not like nothing is happening, a lot is happening.”

Local Government minister Saviour Kasukuwere reiterated the need to address the fiscal deficit as they found that local government was collecting $12 million a month with about $7 million going to wages and salaries.

In the first quarter of the year, the Zimbabwe Revenue Authority surpassed its revenue target by 6% after gross collections totalled $862,47 million on the back of compliance and support.