Zimbabwe on Thursday revised down its growth forecast for 2022 from the initial 5.5 percent to 4.6 percent, reflecting the impact of the global environment as well as the domestic circumstances.
“The revision is necessary to allow spending agencies to meet increasing costs of undertaking originally budgeted programs and projects that will ensure the 2022 objectives are met,” said Zimbabwean Finance Minister Mthuli Ncube.
Prominent negative factors include rising commodity prices, supply chain disruptions, depreciation of the local currency and reduced output from the 2021/22 agriculture season, said the minister.
Inflationary pressures were driven partly by external factors that negatively affected import prices of raw materials, food and liquid fuels, Ncube said.
Imported inflation, he added, contributed significantly to domestic inflation through cost-push factors, whilst domestically, adverse inflationary pressures and exchange rate volatility were the main drivers of inflation.
Revenue collections to year-end are now projected at 1.7 trillion ZWL (4.69 billion U.S. dollars) while expenditures are now estimated at 1.9 trillion ZWL (5.25 billion dollars), against the approved budget of 968.3 billion ZWL (2.67 billion dollars), entailing an additional spending of 929 billion ZWL (2.56 billion dollars), he noted.
The 2022 national budget had aimed to raise 850.8 billion ZWL (2.35 billion dollars) in revenue against the expenditure of 968.3 billion ZWL (2.67 billion dollars), for a target budget deficit of 76.5 billion ZWL (211 million dollars).
According to the official, the Zimbabwean government has introduced measures to instill confidence, strengthen demand for local currency and foster market discipline to contain inflation.
He proposed a supplementary budget of 929 billion ZWL (2.23 billion dollars) to cater for rising costs due to rising inflation.
Ncube said the bulk of the supplementary budget is going towards employment costs to cushion public servants against the increasing costs of living.
He said development partners complemented fiscal resources with an amount of 190 million dollars, with bilateral partners contributing 164 million dollars while the remainder comes from multilateral partners.
To raise additional funds, Ncube also announced an increase of the royalty rate on mineral products, including platinum and lithium, from 2.5 percent to 5 percent, effective from Jan. 1, 2023.
The economy is projected to continue on the growth trajectory, with an expected growth rate of 5 percent in 2023, Ncube said.
