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Chinamasa says tax revenue 1, 4 pct above estimates during first quarter, budget deficit unlikely this year

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BUDGET deficit is unlikely this year after Zimbabwe recorded tax revenue performance 1, 4 percent above estimates during the first half of the year 2017, Finance minister, Patrick Chinamasa, has said.
However, the announcement comes in the background of conservative allocations which have constrained government operations.
Presenting the mid-term budget review statement in parliament on Thursday, Chinamasa said the improved tax collections were due to rules governing the activities of clearing agents and tax consultants in the second half of the year preventing fraud.
“On the back of the above measures, tax revenue performance during the first half of the year 2017 has been 1, 4 percent above budget estimates,” Chinamasa.
“By year end, revenues are expected to rebound to $3, 7 billion, in line with the national budget projections.”
For several years now, the country has been incurring budget deficits running into billions of dollars. Last year, Zimbabwe incurred a budget deficit of $1, 4 billion.
Chinamasa revised 2017 economic growth upwards from 1, 7 percent to 3, 7 percent on the basis of a good agricultural season and mineral prices.
Government expenditure has been a major cause for deficits and Chinamasa has been financing the shortfalls through borrowings—a situation described by international financiers as unsustainable.
“Accordingly, rationalisation of the public service establishment is necessary, complemented by institution of expenditure management measures,” he said citing last year figures where almost 92 percent of revenues were consumed by the wage bill.
In 2017, total exports are projected to reach $3, 9 billion, on account of strong performance in tobacco, PGMs (Platinum Group Metals) and nickel among others while imports are expected to increase to $5, 4 billion on account of a surge in the imports of intermediate goods required in the productive sectors resulting in a $1, 5 billion current account deficit.
Chinamasa said government will be seized with implementing supply response measures by advancing the ease of doing business reforms, implementation of Special Economic Zones, deepening of command programmes.
He said government will intensify revenue mobilisation efforts and consolidate expenditure rationalisation initiatives through budget deficit targeting.Advertisement

“The destiny of the country rests in our own hands. Given the sanctions environment, the country has no choice, but to rely on mobilisation of domestic resources. Hence, our policies require to be aligned to this reality,” he said.