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Budget Deficits Now History

Consolidated statements of financial performance gazetted on Friday have revealed a strong positive variance between income and expenditure, indicating that Government may have found a lasting solution to dealing with budget deficit.

The consolidated financial statements show that in February 2019 there was a surplus of 31 percent, up from the 4 percent recorded in January.

The statements for both months confirm remarks by Finance Minister Mthuli Ncube last week that Government finances were now in a healthier state than over the past few years.

Minister Ncube lamented price increases by businesses, saying it was speculative as Government had stabilised key fundamentals, including overexpenditure, which previously exerted pressure on inflation.

Government has often received flak for reckless expenditure and living beyond its means, which fuelled inflation and the wild run of parallel market foreign exchange rates, in turn driving up prices of basic goods.

The two percent tax on online cash transfers has been a consistent performer in terms of revenue contributions since inception in October last year averaging $100 million over the last two months,.

The Intermediated Money Transfer Tax is part of austerity measures being undertaken by Government which include expanding revenue inflows to support key socio-economic programmes, but the new thrust entails doing this within budgeted Government finances to avoid destabilising budget overruns.

The gazetted figures showed that total revenue for January 2019 came in at $487 million against a budget of $467 million, resulting in a positive variance of $20,6 million, while expenditure totalled $385 million against a budget of $483 million.

Given revenue inflows of $487 million and total expenditure of $385 million, Treasury managed to record a surplus of $102 million, confirming what Minister Mthuli said last week at the Zimbabwe International Trade Fair (ZITF) in Bulawayo.

Minister Ncube said Government was solvent and doing very well on the fiscal front, which has seen it running surpluses that have averaged $100 million since September last year when he came in.

“Major contributors to this positive variance were non-tax revenue, which contributed $19,3 million against budget of $11,5 million and other taxes, which contributed $120,6 million against a budget of $81,1 million, resulting in a positive variance of $39,4 million,” reads the gazetted financial statements.

According to the financial statements, the Government spent $379 million on recurrent expenditures against a budget target of $437,9 million, giving a positive variance of $98,2 million or 20 percent.

Employment costs gobbled a total of $279,6 million compared to a budget of $279,2 million, giving a negative variance of just $383 000 over the 31 days.

Current transfers totaled $54,9 million against a budget of $75,3 million, resulting in a 27 percent variance or $20,4 million in dollar terms.

In January 2019, the consolidated financial accounts show that the Government spent an insignificant amount of funds on capital programmes than it had planned for the period under review.

The encouraging public financial performances by Government extended to February, which saw State revenues totalling $606 million against targeted expenditure for the period of $426 million.

The financial outturn gave a positive variance of $143 million and mjor contributors were non-tax income at $141 million (budget $113 million) and tax on goods, which raked in $336 million (budget $256 million).

Expenditure in February amounted to $521 million against target of 505,7 million, resulting in a negative variance of 3 percent, as Treasury kept the pursestrings tight.

Employment costs during this period, which consume the bulk of Government finances, gobbled $233,4 million against a budget target of $231 million, reflecting a variance of 2,1 percent.

Expenditure on capital programmes amounted to $7,3 million against target of $47,1 million, representing under-expenditure of $39,8 million for the period.

“Airtime levy for February 2019 contributed $11,7 million against a budget of $10,2 million,” reads the financial statements. “This levy is ring-fenced for medical equipment and drugs. Its utilisation is contracted by the need to provide foreign currency for drugs.”

In January, the airtime levy raised $13,7 million against a target of $9,1 million.

While the Government has managed to increase revenue inflows, often beating its revenue targets, it has maintained a tight leash on expenditures to rein in money supply blamed for fuelling inflation.

Source :

The Herald

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