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Golden Sibanda Senior Business Reporter
ZIMBABWE should aim to achieve a 30 percent growth in fiscal space by 2018 in an endeavour to improve quality of spending towards high impact social and capital projects, a United Nations agency said.

The UN agency said to achieve primary fiscal balance Government should broaden the tax base by targeting “hard to tax” informal sector and also introduce taxes earmarked for social sectors to cushion the vulnerable from economic shocks.

This comes as cumulative revenue collections for the period January to September 2015 amounted to $2,632 billion against a revised target of $2,795 billion; a 4 percent drop from the $2,739 billion collected in the same period last year.

The Ministry of Finance revised downwards the projected budget revenues from the original $3,99 billion to $3,6 billion during the mid-term policy review due to the impact of drought on agriculture, which also dampened prospects for growth from the initial forecast of 3,2 percent to 1,5 percent.

Government has targeted average growth of 7,3 percent over the course of the Zimbabwe Agenda for Sustainable Socioeconomic Transformation, its medium economic blueprint crafted to guide planning for the period 2014-2018.

United Nations Children’s Education Fund chief of Social Policy and Research (Zimbabwe) Mr Sam Muradzikwa, made the remarks last week at a 2015 National Budget review seminar ahead of Finance Minister Patrick Chinamasa’s 2016 Budget.

“Of the total expenditure, about 93,6 percent constituted recurrent spending, leaving only about 6,4 percent for development budget. Main recurrent expenditure was employment costs consuming 80,4 percent of the total expenditure,” he said.

Mr Muradzikwa said critical success factors towards fiscal sustainability include rationalisation of the civil service wage bill, parastatal reforms, support for the successful implementation of Lima road map and expedited implementation of the plans to set up Special Economic Zones.

There is also need to clarify the policy environment, address external vulnerabilities such as debt overhang and unsustainable current account deficit, normalise relations with the international community for aid and investments and commitment to the IMF staff programme were also critical.

He said Government continues to spend very little on social and capital projects in the difficult economic environment with development partners committing more on social projects.

As such, there is need to address the macro-economic situation, resolve the $1,8 billion external arrears and $10 billion debt, improve financial sector stability and confidence, address ease of doing business and concerns on equity laws.

Further, Mr Muradzikwa said Government needs to urgently deal with the issue of Governance in public institutions such as parastatals and State enterprises and also mainstream the informal sector into the national economy.

He said to create fiscal space; Government should enhance revenue mobilisation, improve efficiency in finance administration and prioritise expenditure to high impact programmes.

The domestic economy is projected to grow by 2,7 percent in 2016 driven by performance in the financial sector, construction, electricity, tourism, manufacturing and mining, providing initial steps wards primary fiscal balance.

Analysts contend that downside risks to economic growth next year include possibility of a much worse drought than what is anticipated due to the negative impact from climate change.

There also is potential negative impact on the domestic economy due to economic slowdown particularly in emerging market economies such as China.

Appreciation of the dollar against major currencies, particularly against the South African Rand, Zimbabwe’s major trading partner, and depressed global commodity prices may also weigh on prospects for stellar economic growth.