• Tue. Apr 23rd, 2024

Expectations for the Mid-Term Budget Update 


Aug 3, 2023

By ETimes

The Ministry of Finance and Economic Development is expected to provide its mid-term fiscal budget update soon. These are the key expectations for the upcoming presentation:

1. Supplementary Budget

The initial budget had targeted revenues of ZWL$4.3 trillion, and expenditures of ZWL$4.4 trillion with an expected deficit of ZWL$145 billion. In USD terms, the budget was equivalent to US$6.7 billion in revenues and US$6.9 billion in expenditures, with a deficit of US$225.7 million. Since the November 2022 public release of the 2023 Fiscal Budget, the ZWL has lost 86% in value, depreciating from ZWL$635/US$ to ZWL$4,517. The value erosion effect is illustrated by the updated US$ equivalent figures, which put the value of the initial budgeted expenditure at US$1.96 billion and revenue at US$1.9 billion. As a result, the Treasury will be expected to provide a supplementary budget outlining upwardly revised revenue and expenditure targets.

2. 2022 and 2023 Half-Year Budget Outturn

The Treasury will be expected to disclose the actual outturn for the 2022 fiscal year. The 2022 supplementary budget was similarly preceded by an episode of sharp exchange rate devaluation. At the time, the Treasury effectively reduced the real value of the budget and cut the deficit target down to US$402 million from an initial US$1.1 billion. Given the inflationary pressures experienced in the in the first half of 2023, the actual budget outturns will be of keen interest. 

3. Budget Reconfiguration

Under the tight monetary policy stance, the government has prioritized reining in liquidity growth and quasi-fiscal operations. Consequently, to avoid fueling further inflation the Treasury will be expected to present a reduced budget (in real terms). 

Given the election environment, the Treasury will likely cushion the real term budget reduction by also restructuring their expenditure plans. Protecting civil service incomes will likely be prioritized above low priority capital expenditures, and spending on goods and services – Harare

By ETimes

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