By Stephen Chadenga
GWERU City Council has said residents should prepare for a supplementary budget next month, as the current plan approved by government in February has been eroded by currency distortions and inflation.
Acting finance director Owen Masimba said the $46 million 2019 budget, which has since been passed, is now underfunded by 67% after government departed from its stance that the bond note was trading at par with the United States dollar.
“It will be recalled that government has departed from its long standing position that the exchange rate between the US dollar and the bond note/RTGS [real time gross settlement] is
one is to one,” Masimba said on Monday during the first quarter budget review meeting.
“The volatility of the of the exchange rate now at ZWL$3 to US$1 (on the formal market) means that council will be forking out three times more than budgeted. The effect is that council’s budget is now underfunded by 200% as at the current exchange rate of ZWL$3 to US$1.”
Masimba said given the prevailing economic environment, the local authority was left with two options, to increase tariffs or go for a supplementary budget.
He, however, said council would wait for direction from government although it (government) had encouraged supplementary budgets as a stop-gap measure.
“If we do not do either of the two (increasing tariffs or supplementary budget) council will not be able to provide service delivery,” he said.
“If all the budget income could be availed today the city will be able to meet 33% of its planned expenditures for 2019. Is should also be noted if council is to preserve the budgeted nostro value of a total of $278 975 966 for both the $46 117 800 revenue and $93 370 183 capital expenditure budgets, respectively, it should effect a 200% tariff increase or conveniently rate the charges as enunciated by Statutory Instrument 33 of 2019.”
Recently, mayor Josiah Makombe said council was proposing increasing rates, which he said were no longer sustainable, but residents associations vowed to resist the move.