Highlights of Mthuli Ncube’s mid-term budget review

The outlook looks grim

While Ncube tried to sound confident over future growth, the budget statement carried his anxiety over risks building up on the horizon.

He admits that inflation and the fall of the Zimdollar “pose the greatest risk that could potentially knock down economic growth by between 2% and 3%”.

Ncube said he is under pressure from workers demanding salaries in forex on one side, and companies that want to pay taxes in Zimdollars on the other.

“If this is not contained, Government will face serious US dollar cash flow demands,” he warns.

No return to subsidies

Ncube wants utilities to charge economic tariffs. This points to higher costs for power and other services, and would add even more fuel to inflation.

Ncube says: “There is urgent need for appropriate pricing of public goods and services, such as electricity, water and fuel, in order to reduce the subsidy burden and demand for the services whilst also providing scope for maintenance of critical assets.”

Project disruptions

Rising global costs may disrupt the rollout of public infrastructure projects, and government may have to renegotiate some contracts, according to Ncube

“Infrastructure delivery costs are likely to increase significantly due to global inflation and may impact on construction input costs such as aluminium, steel and cement, requiring existing contracts to be re-evaluated or re-negotiated.”- NewZWire

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