Conrad Mwanawashe Business Reporter
The 2018 National Budget is expected to take stern measures on market indiscipline and corruption by enforcing a wide range of measures including cancellation of licences for financial sector institutions involved in underground forex dealings. The measures expected in the 2018 Budget include anti-money laundering and requirements for foreigners with investments in Zimbabwe to open local bank accounts, as well as pay relevant taxes, among others.
According to the 2018 Budget Strategy Paper, which sets the tone for facilitating dialogue among stakeholders, the forthcoming budget will contain measures to deal with retail outlets and financial sector players involved in underground forex dealings through enforcement of Exchange Control and the Bank Use Promotion Act, with cancellation of licences upon conviction. The 2018 National Budget will also contain measures to expedite establishment of the Commercial Court, resolutely deal with the scourge of corruption at all levels; and eliminate multi-pricing.
Government is also targeting to halve the budget deficit to 4 percent of the Gross Domestic Product and subsequently move to a balanced budget by 2020, but says the targets can be achieved if prevalent market indiscipline and corrupt practices are addressed. For this purpose, it outlines macro-economic and fiscal objectives, targets and other projections, taking account of underlying macro-economic and fiscal assumptions. The Budget Strategy Paper also highlights fiscal risks, envisaged to arise during implementation of the Budget and hence, require recognition and mitigatory preparedness and measures.
Overall, the Budget Strategy Paper seeks to achieve focused and well thought-out Budget Proposals that address our economic challenges in a manner that is also responsive to the needs of the people. Fundamental challenges facing the economy identified in the strategy paper revolve around low productivity, domestic production levels across sectors, as well as market indiscipline, that way underpinning prevailing low liquidity and foreign exchange levels in the economy. Central to resolving these challenges is addressing the mis-match between National Budget revenues and expenditures, the paper says.
“Since 2014, the level of the Budget deficit as a percentage of GDP has been on the increase, from 1,2 percent to a deficit of 8,7 percent and 8,4 percent in 2016 and 2017, respectively. In the absence of strong measures targeted at containing expenditures and enhancing revenues, further deterioration of the budget deficit is likely to be sustained beyond 2018,” the strategy paper says. Accordingly, expenditure proposals by line Ministries, Government Departments, Public Enterprises, and Local Authorities should embrace guidance as input into the 2018 National Budget process.