Is Zim really middle-income economy?

By Trust Chikohora | Dec. 12, 2025

National Budget for 2026

The minister of Finance, Mthuli Ncube, presented the National Budget for 2026 in Parliament last week.

This is an analysis of the National Budget.

Global GDP growth fell from 3,3% in 2024 to 3,2% in 2025 and is projected to fall further to 3,1% in 2026. Sadc GDP growth increased from 2,6% in 2024 to 2,9% in 2025 and it is projected to grow to 3% in 2026. Global commodity prices are expected to decline in 2025 and 2026.

However, Zimbabwe’s GDP is projected to grow by 6,6% in 2025 and then by 5% in 2026. This is on the back of yet another GDP revaluation in 2025 which put Zimbabwe’s GDP at US$52,4 billion and gross national income per capita at US$3 200, meaning Zimbabwe is already a middle-income economy in 2025 — really?

I worry about these figures and the unusual continuous revaluations of GDP, especially if it is not really visible on the ground.

So, it may end up rendering the projected GDP growth of 5% in 2026 which is out of sync with global and Southern African Development Community (Sadc) growth projections, meaningless.

Annual ZiG inflation as at October 2025 was 32,7% and it is projected to be at single digit levels in 2026. This is unlikely to be achieved if government starts paying for all its contracts on time.

Government debt rose to US$23,4 billion as at September 30, 2025 and this is unsustainable so government needs to start living within its means.

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Revenue collections in 2025 will be US$7,96 billion, but the minister is projecting to collect US$9,4 billion in 2026.

This is an 18% increase which is rather too ambitious considering that the minister is only projecting a 5% increase in the size of the economy.

This means taxation levels will increase greatly creating a huge burden on individuals and businesses.

Projected expenditure is US$9,5 billion which gives a budget deficit of US$106 million or 0,2% of GDP. But, why budget for a deficit. We need a balanced budget.

It is surprising that the ministry of Finance was allocated ZiG 28 billion, almost the same as Health at ZiG30 billion and more than Agriculture at ZiG27 billion.

What do they need all this money for in the ministry of Finance? That is, considering that Home Affairs was at ZiG17 billion and Defence at ZiG20 billion.

Capitalisation of Empower Bank for Youth, Women’s Bank, Women’s Development Fund, SMEDCO and construction of Women’s markets are all welcome.

The National Sports Stadium has taken too long to fix; it must now be completed. Surely, it cannot be so complicated as to take many years to put bucket seats.

The Bulawayo-Victoria Falls road must be done urgently, as well as the completion of the Harare–Beitbridge road which is long overdue. These must all be done at the right cost.

We still do not understand what the Ministry of Skills Audit and Development really does to justify its ZiG229 million allocation.

Tax incentives for 24 hours’ production are welcome, but we need more details on how it will work.

The commitment to continue reducing licence fees and charges is also welcome, but statutory instruments must be put in place timeously for the benefit of the public.

Review of ZiG Intermediated Money Transfer Tax (IMTT) tax to 1,5% is a step in the right direction, but since most transactions are in US dollars this move must be extended to US dollar transactions as well. IMTT must be reduced further if not totally scraped.

Tax deductibility of IMTT is also useful.

However, 0,5% reduction in ZiG IMTT is totally eradicated by the increase of VAT by 0,5%. VAT affects both ZiG and US dollar transactions and is inflationary. We really needed VAT to be reduced for the Public’s sake, but the opposite was done.

This VAT increase must be reversed.

There was no reduction of PAYE and nothing on bonus tax exemptions. There was no tax relief for individuals and companies. Indeed, there is nothing to write home about for the suffering masses.

Until next time — God bless Zimbabwe.