No need to increase 2024 budget – Prof. Mthuli Ncube

Finance Minister Prof. Mthuli Ncube
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Zimbabwe will not require a supplementary budget to cover grain imports occasioned by the El Nino-induced drought, but will instead reallocate resources and utilise additional income from new taxes to fund the food imports, Professor Mthuli Ncube, Minister of Finance, Economic Development and Investment Promotion said.

Prof Ncube acknowledged the strain the drought would put on the fiscus and the economy saying the Government would focus on maximising existing resources and generating more revenue through taxes.

Devastated by low rainfall that wiped out most of the maize crop, Zimbabwe declared a national disaster to enhance food security. The country urgently needs US$2 billion in aid to avert food shortages.

Neighbouring Zambia and Malawi have also recently declared states of disaster due to the drought.

“We will do a budget reallocation, for example, certain programmes may have to be slowed down to accommodate the importation of grain. I don’t think there will be any need for a supplementary budget as such,” said Prof Ncube in an interview with Bloomberg news channel last Thursday. In the last budget, Zimbabwe introduced new taxes, such as a sugar content tax on beverages and an extension of VAT (Value Added Tax) to certain basic commodities. Minister Ncube said the measures aimed to raise additional revenue.

“(Of) the…taxes that we introduced…we believe will add some additional income so there may not be need to really go back and seek permission from Parliament to do an extra budget but we will just re-allocate from what we have received and work with a tax regime that we have in place,” said Minister Ncube.

The impact of the El Niño drought on Zimbabwe’s GDP is still unclear. Professor Ncube stated that another assessment would be conducted soon to determine if the projected 3,5 percent economic growth needs to be maintained or revised.

“The downward risk is a lot higher now than before, our focus is 3,5 percent and we will do a further assessment in two months and see whether we need to revise that or keep it where it is,” said Minister Ncube.

The worst drought in living memory struck Zimbabwe in 1992, leading to the deaths of a quarter of the national cattle herd. The drought has even impacted drought-resistant crops like cotton, which typically thrive with minimal rainfall.

According to the World Meteorological Organisation, El Nino phenomena occur on average every two to seven years in episodes lasting nine to 12 months.

It is a naturally occurring climate pattern linked to the warming of the ocean surface temperatures in the central and eastern Pacific Ocean and takes place in the context of a climate changed by human activities.