Finance and Economic Development Minister Professor Mthuli Ncube unveiled a $63,6 billion National Budget recently to guide Government expenditure, but coming on the back of constrained revenue streams. The Budget starts being implemented in January in the hope that it will assist efforts to turnaround the economy.
But these efforts can come to nought if there is no deliberate plan to collect revenue efficiently to fund the Budget.
Described as a pro-people Budget by some and industry sensitive by others, the Budget can, indeed, not go without a fair share of criticism.
Although some ministries and departments had presented high figures, the minister whittled them down, resulting in the Budget falling at $63,6 billion, in line with the country’s financial capacity.
Digressing from an austerity-driven Budget which sought to address the troublesome twin deficits — fiscal and current account — next year’s Budget is expansionary and production geared.
Inasmuch as there might be some discord among some sectors of the economy as others feel the Budget did not address their concerns, there is general understanding that the industry incentives will help boost productivity in targeted companies.
In the Budget, the motor vehicle industry got a boost as the minister proposed to remove semi-knocked down kits from the specified list of goods liable for duty in foreign currency.
The facility was extended for a further three years, beginning the first of this month and we hope the motor industry that has been bedevilled by a plethora of challenges will rise from the ashes.
To promote growth and formalisation of small-scale manufacturers, Minister Ncube a introduced Duty Refund Facility whereby players in the sector pay duty on imported raw materials, which is claimable on a quarterly basis, with effect from January 1, 2020.
The pharmaceutical sector, where the revival of CAPS Pharmaceuticals, is key, also got a shot in the arm in the wake of “finalised plans to increase the product range of manufactured goods.”
The Government’s position has a positive effect to the rest of the country’s health system that has been spending millions in foreign currency importing drugs from other countries such as India.
As a result, Minister Ncube proposed to provide for additional raw materials to be imported under rebate.
The dairy sector, which due to many factors, is far from satisfying domestic demand of approximately 120 million litres per annum and requirements of the dairy milk processors, also got further support from the minister who proposed to extend duty suspension on milk powder for the year 2020.
There are many other sectors that received incentives, including the tourism, mining, agriculture and the manufacturing sector.
Inasmuch as the incentives might not have impressed other players in different value chains who feel left out, there is consensus among many players that the Budget will go a long way in stimulating productivity in companies.
This having been said, the success of the economy does not hinge on the Budget alone, which is just a statement of intent, but on the practical implementation of what is proposed in the expenditure plan.
In this regard, the revenue collection arm of Government, the Zimbabwe Revenue Authority (Zimra) should ensure all instruments are sharpened and it is all systems go as we enter 2020.
Without a robust revenue collection system come January 1, a system that is corruption-free and also supported by efficient information technology systems, this Budget will under-perform.
Failure to capture all institutions and individuals who fall within the tax bracket will mean the usually compliant customers will bear the burden of resourcing the Government, while dodgers and defaulters benefit from the sweat of others.
This must be done away with if Minister Ncube’s dreams are to come true.
We hope there will be quick disbursements of funds to key economic enablers to ensure other players along the value chain, including the private sector, get services necessary for the economy to function.
Zimra must up its game in terms of revenue collection so that funds can be channelled to the productive sector to ensure the proposed incentives are received on time.
We know at times revenue inflows will be weak as the year begins and this is where a balancing act of prioritising areas where quick turnarounds can be achieved is imperative.
Moving into the new year, it is critical that the bulk of resources be channelled towards the agriculture sector, with a strong emphasis towards beefing up irrigation facilities given that most areas are expecting normal to below normal rains.
The beginning of the year characterised by diseases that at times wipe out hundreds of domestic animals, while pests and weeds reduce yields drastically.
There is therefore a need for the Budget to prioritise research and development for the country to have quick solutions to some of these problems, even if it means importing some of the technologies.
As we move into the new year, everyone is looking forward to a successful revenue collection year and funding of national obligations to ensure successful Budget implementation.