ZIM’s finance minister Patrick Chinamasa said projected expenditure for 2016 was US$4 billion against revenue of 3.85 billion to give a deficit of US$150 million or 1.1 percent of Gross Domestic Product which will be funded through domestic borrowing, in his budget speech today.
At least 92 percent of the budget will go towards recurrent expenditure and 7 percent towards capital projects, he said.
Chinamasa said agriculture would require 1.7 billion dollars to cover 2.1 million hectares in the 2015/16 farming season.
He said up to September 2015, the government had incurred a 527-million-dollar budget deficit.Zimbabwe’s economy is forecast to grow by 2.7 percent in 2016, up from 1.5 percent this year driven by modest growth in most sectors of the economy.
Chinamasa said almost all sectors of the economy were expected to register reasonable growth rates of between 1.3 percent and 4.5 percent next year.
Chinamasa said the budget was aimed at addressing bottlenecks frustrating economic recovery efforts, adding the budget strives for “building a conducive environment that attracts foreign direct investment”.
The country’s growth prospects, he said, depended on plans to clear US$1.8 arrears to international lenders by the first half of next year to help unlock fresh funding to revive the ailing economy.
The country’s overall growth for 2015 was affected by negative performance in agriculture, mining, as well as electricity and water which contracted 3.6 percent, 2.5 percent, and 10.8 percent respectively, the minister said.
He said the country’s trade deficit for 2015 was anticipated at US2.9 billion in 2015 and was expected to narrow down to US$2.5 billion dollars in 2016 due to an anticipated increase in mineral exports and reduced imports.
The minister predicted both gold production and chrome output to rise next year, with chrome production in 2016 to almost double the production this year.
Meanwhile, he also projected output of both platinum and diamonds to rise in 2016.
To increase viability of the gold sector, the minister proposed to reduce royalty on gold from the current five percent to three percent based on incremental output with effect from January next year. – ANA