KEY stakeholders yesterday hailed measures contained in Finance and Economic Development Minister Professor Mthuli Ncube’s 2019 National Budget proposals, but spelt the need for their full implementation.
Minister Ncube delivered an $8,16 billion Budget with a mix of austerity and revenue boosting measures to enhance economic performance from next year going forward.
Key highlights of the 2019 National Budget include a 5 percent salary cut on senior Government staff; customs duty on luxury motor vehicles and selected goods to be paid in foreign currency; tax-free threshold reviewed to $350 from $300, an upward review (to 7 cents per litre) of excise duty on diesel and paraffin, and to 6,5 cents per litre duty on petrol and an increase in excise duty on cigarettes to $25, among others.
With these and other measures, the 2019 National Budget is in line with its theme “Austerity for Prosperity” and stakeholders have said although the measures announced are positive within the context of the prevailing economic situation, the implementation of the proposed measures will determine the Budget’s ultimate success.
Reserve Bank of Zimbabwe (RBZ) Governor Dr John Mangudya said the Budget Statement is targeting to deal with fiscal and current account deficits.
The twin deficits have been major sources of overall economic vulnerabilities, including inflation, sharp rise in indebtedness, accumulation of arrears and foreign currency shortages.
Highlights . . .
- Private vehicles import duty to be paid in forex.
- Civil servants 13th cheque to be paid before year-end, but based on basic salaries only.
- 2 917 youths officers to be retired by year-end.
- 5 percent salary cut for Government senior officers right up to the Presidium.
- Biometric registration for all civil servants from January 1 to flush out ghost workers.
- Resuscitation of ZISCO and CSC.
- Companies collecting VAT in forex to remit the same in forex.
- Increase of 7 cents excise duty on diesel and 6.5 cents on paraffin.
- Further exemptions to be announced regarding the 2 percent IMT.
- Directors and shareholders to be jointly and severally liable for the tax debts of voluntarily wound up companies.
- Parastastal reforms – partial and full privatisation.
- No further acquisitions of NPLs by ZAMCO.
- Reduction of foreign missions/embassies.
- Multi-currency basket remains with USD as the reference currency
“The issues we need to deal with are four-prong to ensure that we achieve Vision2030. First we need to cut the fiscal deficit, second we need to work on production, third we need to work on exports development and finally we need to work on foreign finance.
“Are these the issues contained in the Budget? Certainly. The Finance Minister was speaking about fiscal consolidation, austerity measures, export development, production and re-engagement and access to foreign finance. Therefore what is left is to walk the talk and it’s not a Reserve Bank of Zimbabwe issue alone, it’s a national issue and we implement measures through other people,” said Dr Mangudya.
“The 2019 Budget is a good roadmap to achieve those four parameters. Once we achieve these it means we are going to have less demand for foreign currency, hence more foreign currency availability on the market, which will mean that the premiums on the parallel markets will go down because we would have reduced the expenditures, thereby right-sizing the economy.
“The national budget has been presented, the next thing is to walk the talk.”
“A good budget statement under very difficult conditions. We have to remain hopeful and work towards making a difference. It’s the implementation that will make the difference,” tweeted economist Brains Muchemwa.
Zimbabwe National Chamber of Commerce (ZNCC) chief executive officer Mr Christopher Mugaga described the budget as “realistic.”
“Some of the changes he plans to initiate are not going to be achieved overnight.
“We commend Minister Mthuli for making moves towards the reduction in fiscal deficit and government expenditure particularly by holding back on Treasury Bills, so that they finance the budget deficit when necessary,” he said.
“But on agriculture he should have clarified if the financing is going to be through Command Agriculture or there will be a new mechanism, since Command Agriculture was the major driver of government expenditure.”
National Business Council of Zimbabwe (NBZC) president Langton Mabhanga, said Minister Mthuli proposed measures that will revitalise the economy.
“It is an interesting budget, and should be viewed as a Budget that plants new seed into the economy. The Minister has made allocations which will turn the economy in a new direction, for example he identified the exploration of minerals as a game changer for the economy as we have not benefited from these as a country in the past.
“He also identified support for small-scale miners as a key component of the sector and to turn around the economy, he probably read from the gold sector where small-scale miners have contributed more than 60 percent to the total sales.
“An important aspect was also pointed out in terms of developing rural economies and he also highlighted that he will incentivise the development of rural communities because that part of the area has been neglected a lot.
“In terms of infrastructure development he underscored the importance of private public partnerships and these will largely be anchored by the private sector because we have for a long time relied on international companies to do the work for us,” said Mr Mabhanga.