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Finance and Economic Development Minister Patrick Chinamasa is this afternoon expected to present the 2016 Budget amid expectations that he will pronounce policy measures to stimulate the economy.

Last year, Minister Chinamasa projected that the economy will grow by 3,2%. Government also hoped to collect $4.1 billion revenue against expenditure of $4.115 billion.

Some of the issues Zimbabweans expect to be addressed by the budget is how is the government going to address the issue of civil service wage bill, Foreign Direct Investment and clarity on indigenisation policy.

According the Ministry of Finance’s 2016 Budget strategy paper, revenues of only $3,86 billion are anticipated, marginally lower than original 2015 revenue inflow projection of $4,9 billion, reflecting low prospects in 2016.

Finance minister is also expected to make some pronouncements regarding use of South African Rand in the country.

This brings to an end our live updates. For full details you can download the budget statement here  . . . . . 2016 National Budget Full Statement

Public Health: Min says malaria still remains a preventable public health challenge and he has proposed to allocate US$1 million in support of the Malaria Indoor Residual Spraying programme, as well as Pre-elimination of Malaria programme, covering the malaria prone zone of Matabeleland North, Matabeleland South, Midlands, Masvingo and Mashonaland West.

Primary Health care: Finance minister has proposed to allocate an amount of US$7 million in the 2016 Budget.

Education – Review of Curricula: Finance Minister says the review of curricula being undertaken by the Ministry of Primary and Secondary Education, offers the opportunity to among other things address skills shortages in science and technology, mathematics and ICTs; improve the quality and relevance of education, emphasising on Technical and Vocational Education and Training; and promote social inclusion and cohesion, through the teaching of life skills.

He has proposed to allocate US$525 000 to support the implementation of the curricula blueprint approved by Cabinet in September 2015.

Teacher Capacity Development – “I propose to allocate US$535 000.”

Early Childhood Development – Minister says Early Childhood Development programme is the backbone of our country’s formal educational system. He has proposed to allocate US$525 000 towards the procurement of teaching and learning materials, whilst earmarking US$245 000 towards supervision and monitoring activities.

He has also proposed to allocate a further US$1.36 million for the construction of more age appropriate infrastructure.

Performance Audits: Minister says Government will carry out performance audits in order to expedite the reform process and has proposed to commit US$2 million to the Office of Auditor General, to facilitate this process He says this process will also be supported by the World Bank.

Efficiency at Border Posts: Minister says efficiency at border posts is important for both exporters and importers’ avoiding unnecessary costly delays and other administrative costs. He says rationalisation and consolidation of all Government departments to one counter to save time and discourage corruption and leakages will be pursued.

“Extension of operating hours at main border posts of Chirundu and Livingstone to 24 hours will be considered in order to improve trade facilitation.”

Diaspora Remittances: He says the country has instituted a number of policies to mobilise diaspora remittances because they are an important source of liquidity in the economy. “Official diaspora remittances have been growing from US$300 million in 2009 to more than US$800 million in 2014 and are projected at about US$960 million in 2015.” The increase is attributed to the improved confidence by diasporans in sending money, through the formal system, says min Chinamasa.

Community Development Fund: Minister has also proposed an allocation of US$500 000 for the Community Development Fund.

Youth Empowerment: He says youth empowerment is crucial to the economy, especially as youths are the leaders of tomorrow.

Energy: Minister says US$482 million required for the revival of the energy sector will be financed through: Loan financing, US$351.3 million; ZETDC’s own resources, US$89 million; Development partners, US$9.1 million; Statutory funds, US$27.1 million; and Tax revenues, US$5.5 million.

Indigenisation and Empowerment Framework – The minister says the position regarding indigenisation in the resources sector has been clarified on several occasions by His Excellency, the President, to reflect that the contribution of our designated entities towards our 51% shareholding will be effected through the resource being exploited, and at no monetary cost to the Government or the designated entities.

16:32 National Competitiveness: Minister Chinamasa says one of the main obstacles to growth and development is the uncompetitive business environment. He says a comprehensive study to critically interrogate the major cost drivers in the economy was undertaken, culminating in the launch of the National Competitiveness Assessment Report in October 2015.

16:28 ENCOURAGING PRIVATE SECTOR INVESTMENT: Investment is crucial to turn around the economy. More investment means more jobs and higher productivity. – Min Chinamasa

“In this regard, a friendly and conducive investment environment remains key for our economy to successfully compete and attract investment in the global market.” He says this is will help us raise foreign direct investment from the 2015 estimated levels of US$591 million, and projections of US$614 million for 2016.

16:22 Tourism: Min Chinamasa says the sector is one of Zim Asset’s quick wins and is recognised as one of the pillars anchoring Zimbabwe’s economic recovery and growth.

Minister says a lot still remains to be done and priorities will be on tourism promotion, infrastructure development, domestic tourism and other destination marketing initiatives. He says according to the Zimbabwe Tourism Authority forecasts, tourist arrivals are projected to increase to 2.5 million in 2016.

16:15 Mining Development: Government is undertaking a number of reforms in the mining sector with a view of enhancing exploration, production, value addition and contribution of mining to the fiscus.

“The reforms also seek to promote accountability and transparency in the sector, and they relate to various areas.”

Mining Legislation – The Minerals Exploration and Marketing Cooperation Bill, as well as the Mines and Minerals Amendment Bill have been approved by Cabinet, and will soon be tabled for consideration by Parliament.

Minister says the amendments to the Mines and Minerals Act is aimed at providing mining title for a specified period, and require holders of mining titles/rights to work their claims within a specified period, that way enforcing the use-it or lose-it principle.

Kamativi Tin Mine – Minister says great progress has been made with regards to the re-opening of Kamativi mine in partnership with foreign investors. “Already, the ZMDC has signed a $102 million Joint Venture Arrangement with Beijing Ping Chang Investments in September to resuscitate operations at the mine.”

16:10 ADVANCING BENEFICIATION/VALUE ADDITION: Minister says Government policy interventions during 2016 will stress the Zim Asset thrust over implementation of strategies to enhance the beneficiation and value addition of our raw commodities.

He says – “The thrust is to facilitate value chain linkages from raw materials across the various sectors, primarily mining and agriculture. There are also opportunities for value addition of our tourism products.”

Minister Chinamasa says “going forward with our value addition initiatives requires concerted and consistent investment, both local and foreign.” He says in mining, focus has been gold refining, chrome ore beneficiation, platinum smelting, as well as cutting and polishing of diamonds.

16:06 Land Utilisation: The minister says implementation of the land reform programme is a noble strategy for empowering indigenous Zimbabweans. Minister says however, on the ground, a number of farms are idle as a number of farmers are not fully utilising the land, a development which has contributed significantly to under-performance of the sector and overall deterioration of the economy.

As a result, he says, Government will implement measures to encourage increased utilisation of allocated land. These are Farm Rental and Development Levies. A1 farmers will pay a US$10 Rental Levy, and US$5 Development Levy, all per annum. A2 farmers will pay a Rental Levy of US$3 per hectare, and a Development Levy of US$2 per hectare, all per annum.

16:02 Research and Extension Services: Min Chinamasa says under the changing climate conditions and other farming dynamics, specialised training and extension services are vital for competitiveness and improved productivity of both large and small scale farmers.

He says Colleges of Agriculture hold the future for this task. Minister has challenged Colleges of Agriculture to broaden their curriculum, offer agro business related training to our farmers, focusing on current agricultural and conservation practices, and adapting to climate change.

He has proposed an allocation of US$3 million towards Research and Extension Services.

15:58 Agricultural Mechanisation: Government secured a US$98.6 million loan facility from the Brazilian Government. The facility is meant to cater for agriculture machinery and equipment, targeting 21 136 small holder A1 and communal farmers under the More Food International Programme.

“Mr Speaker Sir, all the above 21 136 farmers are operating under 178 irrigation schemes, and the equipment and machinery will be available to the A1 and communal farmers on a cost recovery basis.” He says the necessary recovery arrangements have been put in place through Agribank.

15:55 Restructuring of Cottco: The decline in cotton production has also left Cottco on the verge of collapse. Minister says inaction on the part of Government will lead to total collapse of cotton production, with dire consequences across the textile industries’ related value chain.

“In order to reverse decline in cotton farming, Government is championing the resuscitation of cotton production through a restructured Cottco.” Minister says the resuscitation entails Government takeover of US$52.7 million Cottco debt and conversion into equity; Cost restructuring; Resourcing the Cotton Input Financing Scheme in support of the 2015/16 season; Registration of farmers; Marketing of cotton through designated buying points; and Enhancing productivity.

Minister Chinamasa says the Cotton Input Financing Scheme involves provision of inputs to growers on credit, covering seed, fertilizers, chemicals and cash advances for weeding, harvesting and packaging requirements.

15:50 Cotton: The minister says Government recognises the importance of reviving cotton farming because of its agro-linkages with the textile industry, and involvement of over 300 000 smallholder farmers. He says at its peak, cotton production, at its peak, was the major source of incomes and livelihood for rural communities around the Gokwe, Sanyati, Rushinga and Checheche areas, also accounting for close to a fifth of agricultural exports.

“The numerous challenges facing the sector resulted in cotton output declining from peak levels of 353 000 metric tonnes in 2000/2001 to 136 000 tonnes during the last season. In the 2015 cotton marketing season, the crop size further declined to 102 000 tonnes.”

15:45 Vulnerable Households: Minister Chinamasa says Government has already commenced implementation of the Presidential agricultural support input scheme for the 2015/16 summer cropping season. Under this scheme, inputs are benefiting the targeted vulnerable 300 000 households, mainly in maize and small grains production, also to ensure food security at both household and national level.

He has proposed an allocation of US$28 million as input support for 300 000 vulnerable households under the 2015/16 agricultural season.

The input support package comprises the following:

• 1 x 10 kgs of maize/small grain seed;
• 1 x 50 kgs of compound D; and
• 1 x 50 kgs Ammonium Nitrate.

15:40 Financing of Agriculture: Minister says submissions from the farming community were of financial requirements for the summer cropping season amounting to about US$1.7 billion. He says agricultural financing for the 2015/16 season will be, among others, through credit from the banking sector, support arrangements from Government, cooperating partners, farmers’ own resources, as well as contract farming arrangements. Minister says the Banking Sector Facilities banking sector has set aside around US$1 billion, under the coordination of the Reserve Bank in conjunction with the Bankers Association for financing of crop and livestock production during the 2015/16 agriculture season.

15:34 REVITALISING AGRICULTURE Min Chinamasa says Government acknowledges the role played by farmers and agriculture in food security, and promoting value chain systems. He says agriculture contributes about 60% to manufacturing, and also consumes almost 40% of the industrial output. The importance of the sector also lies in its contribution to export earnings of around 30%, 60-70% of employment, and about 19% of GDP, that way providing a major source of livelihood for over 70% of our population, says the minister.

Proposed Budget:  “I propose a Budget of US$4 billion in 2016, with the projected financing gap of US$150 million funded largely through borrowing on the domestic market,” says Min Chinamasa.

Finance Minister has proposed that the amount earmarked for recurrent expenditure be US$3.685 billion, while US$315 million is proposed for the development Budget.

Projected employment costs are, at US$3.191 billion and minister says they are still out of sync with the Zim Asset thrust. He proposes to allocate US$384 million towards operations.

15:30 Minister says treasury projects a rebound in real GDP growth from this year’s estimated 1.5%, to 2.7% next year. He says prices are, however, set for further deflation in 2016, with forecast of 1.6% by end of the year. This will give an estimated nominal GDP at market prices of US$14.2 billion.

15:27 The minister says institutional weaknesses, which are prevalent in both Government, local authorities, public enterprises and other institutions, are a major source of risks which may undermine the 2016 Budget implementation and require collective redressing.

“Consistent with the His Excellency, the President’s Ten Point Plan, prioritisation of the 2016 National Budget interventions will also be necessary.”

15:25 BUDGET FRAMEWORK: Down Side Risks – The Minister says the crafting of the 2016 Budget is anchored on interventions to minimise on all the downside risks that pose adverse implications on the attainment of our Zim Asset objectives and targets. The down side risks, Min Chinamasa says they primarily stem from global developments related to commodity prices and demand, adverse weather conditions, fiscal challenges, as well as institutional weaknesses.

15:22 Domestic Debt: Finance Minister says the bulk of public domestic debt relates to market issuance of treasury bills to assume Reserve Bank debt, under the Reserve Bank Debt Assumption Act passed into law in August 2015.

15:10 Public Debt: Min Chinamasa says total public and publicly guaranteed debt including arrears as at September 2015 is estimated at US$8.368 billion, of which US$1.290 billion is domestic debt, whilst US$7.078 billion is external debt.

15:19 External Trade: Exports and Imports Min Chinamasa says in 2016, exports are projected at US$3.4 billion, against imports of US$6.3 billion, giving a trade deficit of US$2.9 billion.

15:15  Prices: Sustained macro-economic stability, with low inflation levels, continues to provide a conducive environment for enhanced economic activity ceteris paribus. Min Chinamasa says in 2015, the general price level in the economy remained low, with year on year inflation opening the year at -1.3%, and reaching -3.3% by October 2015.

“Inflation deceleration, however, also reflects price correction, weak aggregate demand, tight liquidity and depreciation of the rand against the United States dollar.”

15:11 Trade Deficit: Min Chinamasa says subdued exports in 2015 will culminate in a trade deficit of US$2.9 billion, against US$2.7 billion in 2014. The large trade deficit reflects, among other factors, the country’s over-reliance on foreign goods, most of which can be produced locally. These goods include grains, foodstuffs, chemicals and pharmaceutical products, among others.

15:08 Economic Prospects: Min Chinamasa says the successful resolution of Zimbabwe’s external payment arrears is expected to disseminate positive signals to investors and lenders. In this regard, he says the perceived country risk premium that has made credit lines to Zimbabwe unaffordable should be reduced significantly

In 2016, GDP growth is projected to rebound to 2.7%, mainly on account of mining, tourism, construction and the financial sector. Agriculture is expected to recover by 1.8%, though adequate planning on mitigating the impact of the El-Nino weather will be essential.

14:48 Min Chinamasa is now presenting the budget and says it is an abridged version of the 2016 budget. He thanks Zimbabweans for working with him in drafting the budget. He thanks President Mugabe for entrusting him with the responsibility of superintending over the country’s economy.

“Mr Speaker Sir, I move that leave be granted to present a Statement of the Estimated Revenues and Expenditures of the Republic of Zimbabwe for the 2016 Financial Year and to make Provisions for matters ancillary and incidental to this purpose.  This is in fulfilment of Subsections (1) and (2) of Section 305 of the Constitution of Zimbabwe, read together with Section 28 (1)(a) of the Public Finance Management Act [Chapter 22:19].”

14:45 President Mugabe has arrived in Parliament of Zimbabwe for the 2016 National Budget to be presented by the Minister of Finance and Economic Development.

14:30 Minister Chinamasa has arrived in parliament and will present the national budget shortly.