Economists dismiss Ncube’s US$443 million budget surplus

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By Alois Vinga

Top economists, John Robertson, Persistence Gwanyanya and Prosper Chitambara have dismissed Finance Minister, Mthuli Ncube’s budget surplus of US$443 million recorded in the first quarter of 2019 for failing to address the plight of ordinary Zimbabweans.

Speaking in seperate interviews with Business, the three called on government to do more in terms of right sizing expenditure.

According to Ncube’s recent treasury update on the 2019 first quarter expenditure, revenues, at RTGS$1.9 billion outperformed targets of RTGS$1.8 billion.

This led to savings of RTGS$219 million and a budget surplus of RTGS$443 million.

In his update, Ncube said that government managed to subsidise ZUPCO buses, purchase medicines and invest in education.

Chitambara expressed concern that the budget was still skewed towards high consumption and was doing little to address challenges being faced by a vulnerable population.

“Only 4 % was invested towards welfare expenditure while recurrent expenditure is still taking up 88 % of the total fiscal expenditure,” Chitambara said.

He added, “Notably, 12 % went towards capital expenditure and employment related costs chewed 70%.

“So a 90 % consumption oriented expenditure signifies that more still needs to be done and such a trend coupled with the current inflationary pressures also means that the surplus is nothing much in real terms.”

Robertson predicted that ongoing subsidies on the social welfare side may not continue due to high inflationary pressures and declining consumer demand which will have an impact on revenue collection.

“Inflation and higher prices in an environment with low salaries lie ahead as threats and this may result in reduced Value Added Tax collections due to reduced demand and in addition to this, government’s decision to reduce fuel tax will impact on the sustainability of the surplus recorded in the first four months,” he said.

However, economist Persistence Gwanyanya said the registered surplus was a step in the right direction as it positioned government to spending while maintaining there was room for improvement.

“While government has collected more, there is need to be clear on the exact amounts being spent for the public’s benefit. The amounts being spent on employment costs are still high and what boggles the mind is that on employment costs, almost 40 percent is going towards paying allowances for top civil servants,” he said.

Ncube has called on the nation to appreciate the rate at which economic progress has been made despite years of stagnation.