HARARE - Funding Zimbabwe’s $4,1 billion 2014 National Budget will be a tough task as government’s revenue collections continue to shrink, analysts say.
This comes as President Robert Mugabe’s administration — which failed to secure external budgetary support or bail out packages from international financiers like the International Monetary Fund — missed its 2013 revenue target by six percent.
According to figures released by tax collector, Zimbabwe Revenue Authority (Zimra), government last year collected $3,4 billion out of a targeted $3,6 billion.
The authority said it collected $887,6 million in the fourth quarter to December 2013 missing Treasury’s target of $1,1 billion by 18 percent.
Upon presenting his 2014 budget, Finance minister Patrick Chinamasa, admitted that it would have to be financed from internally generated revenue, adding that “current expenditures will account for $3,6 billion — of which employment costs would be $3 billion — representing about 73 percent of the total budget.
Of the $4,1 billion budget, the Treasury chief projected that tax revenues are anticipated to constitute $3,824 billion, with the balance of $296 million being non-tax revenue.
“…current expenditure levels imply that only $492 million remains available for supporting capital development programmes during 2014,” he said.
“Based on the projected nominal GDP of $14,065 billion, the 2014 budget will be anchored on revenues of about $4,120 billion (29,3 percent of GDP), up from the expected $3,722 billion by end of 2013,” Chinamasa said.
The budget is also being weighed down heavily by a high debt overhang resulting in limited and highly priced lines of credit to fund it.
Yesterday, Zimra chairman Sternford Moyo said the authority “will continue to mobilise resources for the nation even in the face of a shrinking revenue base.”
Revenue heads which provided the bulk of the collections included Pay As You Earn (Paye), excise duty and corporate income tax.
Paye contributed $740,3 million against a target of $685 million resulting in a positive variance of eight percent.
“The revenue head’s collections may improve slightly in 2014 because of the proposal to tax monthly income above $200 000 at a flat rate of 50 percent,” said Moyo, but however, added that retrenchments and company closures may negatively affect future flows of revenue under this head.
Company tax missed the target of $457 million to record $401 million largely attributable to the general economic slump which limited the expansion of business towards income generation.
Gross collections for Vat were $1,2 billion against a target of $1,16 billion resulting in a positive variance of three percent.
Vat on imports contributed the biggest chunk of this revenue head with total collections standing at $497 million against a target of $483 million.
Takunda Mugaga, a leading independent economist, said the 2013 revenue streams is clear evidence that the 2014 $4,1 billion budget is unachievable.
He noted that overall revenue performance by Zimra “is clear testimony of how authorities are struggling to deal with the sprouting informal sector”.
“The unwanted economy is spreading at a much faster pace,” Mugaga said adding, “Vat on imports at $497,57 million in a nation with an import bill exceeding $5 billion is testimony of how porous the Zimbabwean borders are.”