By Alois Vinga
FINANCE Minister, Mthuli Ncube Thursday, presented a budget anchored on five pillars while projecting a 3 % economic growth including a 2 % inflation rate by the end of next year.
The budget statement prepared under the theme , “gearing for higher productivity, growth and job creation” sets five priority areas, productivity and growth, job creation, competitiveness, promotion of more sustainable and inclusive development and export diversification as well as import substitution.
Ncube envisages an economic recovery of up to 3% in the forthcoming year basing on a number of strategies despite admitting the economy will shrink to -6.5% this year.
“Growth is primarily premised on the following key assumptions ,expected better rainfall season , better planning for increased agricultural production, improved macroeconomic stability, extension of supportive tax and non-tax incentives to stimulate domestic production and advancing implementation of the ongoing ease of doing business reforms,” says the document in part,” said the Finance Minister.
The statement envisages inflation falling to single digits from the first quarter of 2020 to close the year around 2% on the back of commitments by the Central Bank to implement tight reserve measures, Ncube told Parliament.
Ncube added that informed by the above economic developments and outlook, revenue collections for the coming year are estimated at $58.6 billion against total expenditure of $63.6 billion, excluding retentions.
The treasury chief said subsidies on fuel, electricity and agriculture have, in the past, led to large and often unpredictable expenses and will be scrapped going forward.
“Where subsidies are deemed essential and can be financed, these will need to be clearly targeted and reflected in the budget with adequate budgetary provisions,” he said.
Turning to fuel and electricity, the treasury boss said pricing frameworks shall remain comparable to those charged in neighboring countries in a move aimed at removing arbitrage opportunities.
The existing grain marketing subsidies for maize and wheat that were being provided to grain millers through the Grain Marketing Board will be scrapped and the intervention will see grain being sold at market prices.
A reimbursement system will be implemented in order to extend the subsidy to the producers of roller meal, cooking oil and bread for the benefit of ordinary people.
The statement said fiscal consolidation reforms saw consistent monthly budget surpluses reaching $1.4 billion between January and August 2019 while the current account managed to deliver a positive balance of US$116.4 million during the first half of the year.
The burden of agricultural financial support was weaned from government in favor of a bank- led model on the back of resolving the bankability of 99 year leases.
Direct financing support by government will be targeted at vulnerable households under the Social Protection.
In a bid to end youth unemployment, the budget statement unveiled a $500 million National Venture Capital Fund which will be capitalised in both local and foreign currency, to incorporate the financing youth start-up projects with preference being given to targeted areas in the context of the Local Content Strategy.
In the budget statement all employers who hire youths will get $500 per individual.
The mining sector is expected to rebound by 4.7% while agriculture is expected to grow 5 %.