Zimbabwe declares $59.3 million budget surplus

Finance and Economic Development Minister Professor Mthuli Ncube

TREASURY has declared a budget surplus of $59.3 million in the third quarter of 2019, a third quarter bulletin by the finance ministry has revealed.

According to the document, revenue collections during the year’s final quarter performed above target by $875.1 million, with tax and non-tax revenue surpassing targets by 16.1 %.

“Resultantly, a budget surplus of $59.3 million was realised during the quarter.

“The subdued budget surplus in the third quarter when compared to $360.4 million realised in the second quarter was a result of high expenditures during the month of September,” Treasury said in the document.

The performance represents a 106.4% increase from the 3.1 billion collected in the second quarter of 2019, reflecting improved tax revenue collection, price increments and Quarterly Payment Date (QDP) which fell due on 25 September 2019 when companies were supposed to pay 30% of their projected profits in corporate tax.

Major revenue injectors were VAT which contributed 27%, followed by Excise Duty at 16%, and Corporate Tax at 14.6% as all revenue heads performed above their quarterly targets save for the non-tax revenue.

Pay as You Earn (PAYE) Tax was on the fourth position in terms of its contribution to total revenues at 13.8%.

While the Finance Ministry remains optimistic of positive revenue performance, the third quarter surplus is lower when compared to the second quarter in which $360.4 million was realised due to high expenditures during the month of September.

The bulletin said month-on-month inflation opened the quarter at 21% in July 2019, before slowing down to 18.1% and 17.7% in August and September, respectively.

Between July and September, government overspent by $ 679.6 million, equivalent to 12.2%.

“Employment costs at 32.3% constitute the second largest share of total third quarter expenditures. Over-expenditure on employment costs by $433 million during the review period is largely on account of cost of living adjustment since April 2019 and pension & NSSA reviews as well as filling of critical posts,” the bulletin said.

The continuous declaration of budget surpluses comes at a time when experts have questioned the reasons government is failing to meet citizens’ basic needs like provision of medicine, adequate salaries payment for its workers who are threatening to embark on industrial action.

Doctors have been on strike for the last four months over poor salaries, allowing economic commentators to conclude the Zimbabwe dollar was a fictitious currency that was not being accepted by the local market.