Ayesha Nyanzunda
Economists are forecasting that the national treasury will focus on maintaining the stability of Zimbabwe Gold (ZiG) and revising economic growth projections ahead of the Budget Mid-term Review
The Minister of Finance, Economic Development, and Investment Portfolio, Professor Mthuli Ncube, is set to present the mid-budget review before parliament on Thursday.
In an interview with this publication, economist Victor Bhoroma said he is expecting the fiscal policy review to ensure the stability of the fairly new currency, ZiG.
“The government has to put in place a plan in terms of infrastructure financing that is sustainable because, if you look at what has been happening in the past, whenever contractors are paid, whenever there is a large amount of money pumped into the market, there is a serious devaluation of the local currency. That means the infrastructure financing model that we have is not efficient and has monumental effects on the economy, especially on the demand for foreign exchange, the devaluation of the local currency, and the erosion of value,” explained Bhoroma.
He also expects an adjustment of taxes.
“It’s important for the ministry to be able to realign taxes and ensure that customs and VAT (value-added tax) or import duties on raw materials that are used to manufacture goods locally are cheaper than importing goods of the same class.
Meanwhile, Dr Prosper Chitambara says the minister should adjust the economic growth projection.
“I am expecting the minister to come up with a revised growth projection for this year, given the challenges of the drought and the decline in mineral or commodity prices, which will not only affect the mining industry but the whole economy,” said Dr Chitambara.
The African Development Bank Group has estimated slower growth of the Zimbabwean Gross Domestic Product for 2024. A grith of 2.0% is projected on account of below-average agricultural output due to the El Nino weather phenomenon. Low mining output is also expected due to lower international mineral prices.
“We are also expecting an update on how the budget has actually performed during the half-year in terms of public spending and public revenues. ,” added Dr Chitambara.
Economists also expressed that the nation will be expecting an update on significant government projects.
Some members of the public are expecting the government to adjust taxes downward
However, Dr Chitambara does not believe the ministry will adjust any taxes due to the pressures of public spending.
Last week, Professor Mthuli Ncube said the El Nino drought has had cascading impacts such as reasonable electricity production (hydropower) and so forth, and this has resulted in the government taking down economic growth projections.