Adios unbudgeted subsidies: Treasury

Business Reporter

Zimbabwe is doing away with unbudgeted subsidies and disbursements will  now only be limited to budgeted expenditure, Finance and Economic Development Minister Professor Mthuli Ncube said.

Presenting the 2022 National Budget Statement to Parliament on Thursday last week Minister Ncube said unbudgeted spending had previously undermined the effective implementation and control of the budget.

In the past, major areas contributing to unbudgeted expenditures included subsidies in the form of support price for farmers and grain procurement as well as new infrastructure projects and acquisition of financial assets, Minister Ncube said.

Some outlays to agriculture, while provided for in the national budget have often exceeded budgeted amounts by a wide margin.

“Unbudgeted programmes and projects, if included in the budget, tend to crowd out planned activities while also undermining the Budget objectives,” said Minister Ncube while presenting the 2022 budget.

“With regards to subsidies, the Government has adopted a guiding framework that limits outlays on such expenditures only to those that have been explicitly budgeted, quantified and approved through the annual estimates of expenditure.”

This year, the Government spent nearly $3 billion to pay cotton farmers who had not been fully paid last year.

This was after the Government announced a price which cotton merchants, including The Cotton Company of Zimbabwe, which administers State-sponsored Presidential Free Inputs Scheme, were unable to pay.

Adherence to the approved budgets, Minister Ncube said forces Ministries, Departments and Agencies (MDAs) to reallocate from existing allocations thereby minimizing the macro-economic impact of such over expenditures.

Meanwhile, Minister Ncube said while there was a huge expectation to review the public wage bill to October 2018 levels, this would have resulted in under spending of capital projects.

“Efforts to realign the budget away from consumptive expenditures towards critical social sector and developmental outcomes continue to be hampered by wage bill pressures,” he said.

“There is huge expectation to review public wages to the October 2018 levels, which will imply a risk of $114,8 billion to the budget (2 percent of gross domestic product (GDP).

“If accommodated, this results in underspending on capital projects and other social programmes, thereby undermining budget execution and outcomes including delivery of critical public services to citizens,” he added.

Minister Ncube said investments in project preparatory activities should ensure only ‘shovel ready projects’ are included in the budget.

“Strengthening of monitoring and evaluation, on the other hand, allows for timely policy interventions for project specific challenges thereby improving on delivery,” said the Minister.

Minister Ncube is targeting a 5 percent gross domestic budget deficit next year.

 

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