Zim budget deficit balloons

HARARE – The budget deficit has ballooned from $400 million to $1,7 billion, creating a major fiscal crisis for government.

To plug the deficit, government is resorting to heavy borrowings.

Finance minister Patrick Chinamasa said yesterday central to the cash shortages is mismatch between the stock of foreign currency available, as represented by hard currency and nostro balances, and electronic Real Time Gross Settlement money balances in banks.

This is “largely being fuelled by borrowing requirements to finance the budget deficit,” he said.

He acknowledged that the prevailing cash shortages have “imposed untold hardships on the generality of the population, particularly among the poor and rural areas”.

Chinamasa said government, through the Reserve Bank of Zimbabwe, continues to institute measures to ensure that the public is able to access their earnings and savings as and when they need them.

Speaking in Parliament in October this year, the Finance chief said the country had $1 billion physical cash in circulation

“The $1 billion translates to around 15 percent of deposits, which is international best practice in normal economies,” he said back then.

Yesterday, Chinamasa said the country needed to address the “primary drivers of the problem” through targeting critical economic sectors.

“It is also for this reason the new economic order is targeting to enhance production and exports by adopting investor friendly policies, re-engaging with the world, easing the way we do business, addressing corruption and indiscipline,” he said.

He expressed appreciation to Zimbabweans for embracing the use of plastic money and mobile transactions, with more than 75 percent of retail transactions now being done through electronic transfers.