Zimbabwe can significantly and swiftly boost government revenue by stabilising prices and eliminating exchange rate distortions, the World Bank says in its latest public finance review.
It says its analysis shows that Zimbabwe’s treasury lost over US$4.5 billion between 2020 and 2023 due to monetary distortions.
Zimbabwe has been going through economic turmoil over the past few years forcing the country to abandon the Zimbabwe dollar to settle for the Zimbabwe Gold but it also succumbed under pressure just after five months but has since stabilised though business continues to complain about the uncertainty.
“Enhancing price stability could help recover inflation-related tax losses promptly,” the World Bank says in its review released yesterday.
“Potential reforms to increase tax revenue efficiently and equitably include streamlining corporate tax incentives, strengthening mining, property and wealth taxation, aligning health excise taxes in line with international standards, and improving tax administration using digital technologies.
“Improving the efficiency of public spending is essential for supporting fiscal consolidation and achieving long-term sustainable and inclusive growth. There is potential to improve the government’s allocative efficiency to improve value-for-money in areas such as health care and capital investments,” the review says.
It also says improvements in procurement systems, including the use of e-Procurement, also present significant opportunities for efficiency savings.
“Efficiency in public services administration is also key, as the government of Zimbabwe’s jobs evaluation report suggests there are opportunities to streamline the civil service. The progressivity of expenditure policy can also be improved through more and better targeted spending on social protection. The operationalization of a national “social registry” could help improve targeting of Zimbabwe’s current social protection systems and help improve climate resilience.”
Pro-third world economists have scoffed at World Bank and International Monetary Fund prescriptions saying they are meant to perpetuate the status quo by saddling developing countries with debt so that they can continue to be dictated to.
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