Zimbabwe has met its critical target of dealing with the fiscal and current account deficits, with the first half of the year recording consistent fiscal surpluses and a substantial improvement in the current account balance.
By Tawanda Musarurwa
The country’s current account — for the first time since 2009 — registered a surplus of US$196 million in the first quarter of the year.
The short-term Transitional Stabilisation Programme 2018 – 2020 (TSP) and the 2019 National Budget’s “Austerity for Prosperity” theme, were premised on dealing with the country’s long-standing problem with fiscal and current account deficits.
Since the promulgation of the TSP, and the announcement of the 2019 National Budget, the Government has been implementing bold and fundamental fiscal and monetary policy measures that were supported by structural and governance reforms.
And the measures have been bearing fruit.
Presenting the Mid-term Fiscal Policy Review last week, Finance and Economic Development Minister Mthuli Ncube, highlighted the developments.
“We have put in motion an irreversible process for rebuilding a stable, strong and democratic macroeconomic environment. The fiscal and current accounts are now balanced and under control, while the tools of monetary policy have also been activated — thus representing an essential and complete toolkit for dealing with various macro-economic challenges facing the economy,” he said.
Resultantly, the country registered a current account surplus of US$196 million between January and March this year, the first in 10 years.
“A surplus of US$196 million was registered in the first quarter of 2019 compared to a deficit of US$491 million for the same period in 2018, constituting a major improvement in the current account,” added Minister Ncube.
And for the half year period, a budget surplus of $803,6 million was realised.
“The savings clearly reflect entrenchment of fiscal discipline in line ministries and government departments,” said the Finance Minister.
In previous years, fiscal and current account deficits have been major sources of overall economic vulnerabilities, including inflation, sharp rise in indebtedness, accumulation of arrears and foreign currency shortages.
Curbing of the fiscal deficits is a critical step in the broader economic revival agenda.
Other critical issues are the need to boost production, exports development and re-opening access to foreign finance.
The 2019 National Budget provided a good roadmap to achieve those four parameters.
Analysts are of the opinion that once these issues are completely dealt with, Zimbabwe will have less demand for foreign currency, which will mean that the premiums on the parallel markets will go down due to a reduction in expenditures.
Zimbabwe’s ongoing economic reforms have even received thumbs-up from some unexpected quarters.
Earlier last month, the United States noted positive moves taken by the new administration.
“The Transitional Stabilisation Programme, announced in 2018, includes structural and fiscal reforms that, if fully implemented, would resolve many of the economy’s fundamental weaknesses,” said the US State Department in its July 11 executive summary of the 2019 investment climate statement on Zimbabwe. – The Herald