FINANCE minister Herbert Murerwa yesterday presented a startling $327,2 trillion supplementary budget which will spawn a hefty deficit and put the govern
ment in the red to the tune of $253 trillion.
The supplementary budget bloats this year’s budget to a colossal $451 trillion, a figure which far surpasses last year’s initial targeted expenditure of $123,9 trillion.
Government this year expects to raise only $216 trillion from taxes — its major source of revenue. The gap between revenue and expenditure means government will have to borrow an additional $253 trillion, a move that will push government further into debt. This is the only time in the history of Zimbabwe that a supplementary budget has exceeded the original budget.
The new figures mean that government will have a budget deficit of 56% this year alone. During his budget statement last year, Murerwa had projected that the country would have a $13,9 trillion budget deficit which translated to -4,6% of the gross domestic product (GDP) — the country’s total wealth.
The budget deficit of $253 trillion in the supplementary budget translates to 30% of the GPD which has been shrinking for the past seven years.
Presenting his mid-term fiscal policy review, which analysts described as a narration of the problem rather than a solution, Murerwa all but admitted that government’s spendthrift ways and inflation had cranked up the expenditure in the first six months of this year.
His supplementary budget means that government will have to borrow more than half of the money it needs to meet its mounting obligations this year — a move that economists said would fuel inflation and crowd out productive sectors from lending institutions.
Murerwa said government incurred a deficit of $17,8 trillion which it financed through borrowing from the local market. Government is currently saddled with a whopping $46,1 trillion debt which means that each and every Zimbabwean — including children — owe nearly $4,1 million each.
Murerwa also admitted that inflation will remain high to end the year between 950-1 000% admitting that its pressures will continue to wreak havoc unless there is a policy change in both fiscal and monetary terms.
Murerwa’s figures are a direct contradiction to Reserve Bank of Zimbabwe governor Gideon Gono who said inflation will close the year at between 280% and 300%.
Murerwa made the same promises to reduce inflation by cutting down on government expenditure, curb unproductive borrowing and reduce money supply — all of which were part of his commitments in the budget last year but yielded nothing in the first half.
Murerwa made attempts to revise his economic figures claiming that the GDP, which he put at $840 trillion, will grow by between 0,3-0,6% instead of the 3,5% decline that he had predicted during the budget last year. He said Zimbabwe was battling to service its bloated external debt which is now nearly US$4 billion with arrears amounting to US$2,1 billion.