2023 budget for stability, economic development

the herald

Herald Reporter

The main objective of the National Budget for the coming year given yesterday by the Minister of Finance and Economic Development, Mthuli Ncube, was to accelerate economic development, find more money to give civil servants a better deal and ensure that the wide range of people in need of help get it.

While the budget ensures the reinforcement of macroeconomic stability, greater fiscal prudence is maintained to ensure that continued growth is boosted. Gross domestic product is expected to be $21.8 trillion, about 3.8% more than this year.

Revenue will likely be around $3.9 trillion, with most of the money likely to be $3.5 trillion from taxes and the rest from fees and other sources.

Spending will be just under $4.25 trillion. The small difference will be $337 billion, and the loan will be for capital development.

In addition to local inputs, projected revenues will be complemented by domestic and foreign resource mobilization initiatives worth US$575.5 billion, bringing the total 2023 budget to US$4.5 trillion, said Prof. Ncube.

“Consequently, total expenditures for the year 2023 are set at $4.5 trillion, including loan payments of $248.6 billion.”

The budget has seen very few changes in taxation, most of the changes having been made to the mini-budget in the middle of this year, and with very little inflation since the then reforms.

VAT is increased marginally to 15%, albeit a bit more zero tax on the essentials, but the rest of the tax reforms are to ensure that those who must pay a certain tax pay it and pay it on time.

Late payments incur interest at 200% per annum, and the equivalent of $30 per day will be charged for further delays. VAT collection is being tightened and paid on time, and banks that delay passing on taxes to their customers now have to make transfers quickly.

When it comes to major spending, public servant pay remains the biggest item, but only 51.8% of total spending. This continues this year’s modest increase and brings public service payments in line with best practice. In the coming years, the increase will still be there, but at lower levels.

As is typical now, the second biggest spend is on capital development, jumping from $656.5 billion next year to $454.7 billion this year. This is money that is spent on dams, roads, bridges, power stations, health facilities, schools and universities, and a host of other services.

Prof Ncube is insisting that not only do those who should pay taxes, but also those who spend the money must ensure that Zimbabwe gets the full value for what is spent. Various laws are being changed to ensure that ministries, departments and agencies carry out due diligence before signing any agreements and that business is done only with honest companies, not those that set big profits and charge high fees.

The Government is not opposed to the private sector and, in fact, wants more doors open for more investments, and wants these businesses to be honest.

The budget continues to ensure that additional money is available for Pfumvudza/Intwasa and that programs increase finance for loans to youth, women and micro, small and medium-sized enterprises.

The growth we are seeing in the economy is slowing down as the global economy hits turmoil, but Zimbabwe will be among the top nations in Africa and in our own region of Southern Africa. All economic sectors of the economy are expected to see growth in the coming year, with mining and agriculture topping the list, although global mineral prices are falling marginally, as are agricultural prices.

In other words, increases in production are greater than any drop in prices, so Zimbabwe continues to gain.

Next year’s budget, for the first time, looks at potential risks, both financial and physical, and how they can be minimized so that economic growth is not hindered.

Among financial measures, the budget increases funding for early warning of cyclones and other weather disasters so that damage is more limited and to ensure that there is uncommitted money to address damage control without having to cut other programs.

Prof Ncube emphasized that some changes in some services need to be priced more effectively. Zimbabwe needs to rapidly expand its electricity supply, and that means tariffs will need to rise to cover costs, especially when there are more higher-cost sources in the mix.

Professor Ncube also warned that independent power producers will need tariffs to cover their costs before most start building power plants. Many licenses were issued, but few stations started, mainly because of feasibility. And one of the subsidies hidden in the tariffs is the low fees for ferrochrome smelting, sometimes that needs to end because other consumers shouldn’t be subsidizing that business.

The minister is still chasing real and hidden subsidies instead of wanting to provide direct help to the most vulnerable and have that help clear in the budget.

In addition to cleaning up acquisition and other laws, the budget also aims to improve mining law and other business laws to improve tenure, further simplify the ease of doing business, and remove bottlenecks that limit investment and business growth. .

2023 budget for stability, economic development

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