The Zimbabwean government has been forced to cut spending on certain budget items following a 43% devaluation of the ZiG currency against the US dollar in late September.
The country’s Treasury has instructed government departments to prioritise their spending commitments for the remainder of the year, as non-wage budget support will be severely limited.
A circular sent to Permanent Secretaries and the Clerk of Parliament on November 13 warned that non-wage budget allocations will be restricted.
Finance, Economic Development and Investment Promotion Permanent Secretary George Guvamatanga said:
<blockquote>
As you may be aware, the local currency unit (ZWG) recently depreciated by 43 per cent against the United States dollar, resulting in a substantial mismatch between revenue inflows, collected in some cases with a one-month lag and local currency expenditures that immediately adjusted to the new exchange rate, in the process severely constraining fiscal space for the last quarter of 2024.
The imbalance was further exacerbated by a backdated review award in October 2024 to the civil service.
Given the consequent limited fiscal space and the need to mobilise additional resources to fund critical inescapable expenditures that include the 2024 bonus award, food deficit mitigation support, 2024/25 agriculture input support, and utilities among other critical requirements, Treasury wishes to advise that non-wage budget support for the months of November and December 2024 will be severely constrained. MDAs are, therefore, requested to prioritise their expenditure commitments during this period.
To support the prioritisation programme, Treasury shall be implementing the following complementary expenditure containment measures for the remainder of the 2024 fiscal year:
<ul>
<li>Prioritise payment of outstanding unfunded payment runs;</li>
<li>Treasury concurrence for foreign travels shall only be granted where funding is provided by Agencies other than Government, Local Authorities and State-Owned Enterprises;</li>
<li>Deferment of all local workshops with the exception of those granted prior approval by Treasury;</li>
<li>Rationalisation of fuel for operational requirements by 50%…</li>
</ul>
</blockquote>
Zimbabwe is set to present its 2025 budget at the end of this month. However, Finance Minister Mthuli Ncube said that funding bids have already exceeded ZiG700 billion, far surpassing the budget ceiling of ZiG140 billion.
More: <a href="https://www.pindula.co.zw/">Pindula News</a>

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The Zimbabwean government had to cut spending because their currency lost value against the US dollar. They told government departments to spend carefully for the rest of the year. The Finance Secretary said the currency lost value by 43%, which made it hard to pay for things. They need more money for important things like bonuses and food. They will limit spending on things like travel and workshops. Zimbabwe is making plans for next year's budget, but they already need more money than they have.

Government Cuts Spending As ZiG Drop Hits Budget

Zimbabwe’s consolidated debt now stands at a staggering US$18 billion, with a substantial portion owed to international creditors which include institutions like the World Bank, International Monetary Fund (IMF), and bilateral partners, including China.
Domestic public debt has also risen due to non-payment of government-guaranteed debt by private beneficiaries.
The country’s debt burden poses significant threats to national development and access to global financial markets.
Addressing lawmakers in parliament on Wednesday, Minister of Finance, Economic Development and lnvestment Promotion Deputy Minister, David Mnangagwa said the country’s debt was still undergoing validation and reconciliation. Said Mnangagwa (via <a href="https://www.zimlive.com/zimbabwes-debt-burden-balloons-to-us18-billion/">ZimLive</a>):
<blockquote>
Our debt figures are still going through some validation and reconciliation.
There has been US$1.9 billion recapitalisation of the Mutapa Fund and an additional US$1.2 billion that was assumed from the Reserve Bank of Zimbabwe (RBZ).
These would still need to be reconciled and validated before they are entered into the debt profile. That process is still underway.
</blockquote>
Mnangagwa also said the debt reported to the African Development Bank in April stood at US$2.7 billion, higher than the approved budget for this year.
The government’s efforts to address the debt crisis are being hindered by the lack of clarity on how the funds were used.
Zimbabwe’s appeal for debt forgiveness and penalty waivers has so far been unsuccessful.
The United States stopped participating in a critical debt restructuring programme in January citing human rights abuses, lack of electoral reforms and crackdown on opposition politicians.
More: <a href="https://www.pindula.co.zw/">Pindula News</a>

Zimbabwe’s Debt Burden Rises To US$18 Billion

Finance and Economic Development Minister Mthuli Ncube has said the assumption of the Reserve Bank of Zimbabwe (RBZ)’s external debt by Treasury will make budget financing for the 2024 fiscal year difficult.
On 15 June, President Emmerson Mnangagwa issued Statutory Instrument 108 of 2023 which authorised Treasury to take over RBZ’s external debt.
<a href="https://www.newsday.co.zw/business/article/200015330/rbz-external-debt-gives-treasury-headache">NewsDay</a> reported that this was done to prevent the central bank from printing money to service its debt but since the promulgation of the statutory instrument, Treasury has acquired $7.69 trillion worth of debt accrued by the RBZ between December 31, 2022 and end of May.
The 2024 budget strategy paper released by Treasury last Friday reads in part:
<blockquote>
Government’s financing requirements are expected to remain under pressure during 2024 on account of the takeover of the central bank’s external obligations, growing informalisation and the need to sufficiently provide for NDS1 (National Development Strategy 1) programmes and projects during the medium term.
However, the government’s commitment to maintain the budget deficit within the 3% of GDP (gross domestic product) threshold will be critical in managing inflationary pressures and restoring stability in the economy.
</blockquote>
Ncube said economic growth was expected to remain positive as it was projected at 5.3%, 5.2% and 5% for 2023, 2024 and 2025, respectively, well within the NDS1 growth targets. He said:
<blockquote>
Government measures in support of macroeconomic stability, coupled with the drive towards structural economic transformation, value addition and beneficiation, are expected to sustain this positive growth trajectory.
</blockquote>
He added that increased electricity generation from the Hwange Thermal Power Station and investments by independent power producers will further boost economic activity during 2024.
More: <a href="https://www.pindula.co.zw/">Pindula News</a>

Treasury Frets Over RBZ External Debt

The Ministry of Finance and Economic Development released only one-third of the funds allocated to the Ministry of Health and Childcare in the 2022 national budget.
This was revealed by the Health Minister, Vice President Constantino Chiwenga while addressing a 2023 Parliament pre-budget seminar in Harare on Monday.
Chiwenga said the underfunding of the health sector resulted in his ministry managing to procure only 14% of the required medicines. He said:
<blockquote>
The 2022 annual budget for medicines and health facilities was $15 billion, and only $5 billion was released.
The comment from the public was that people were failing to access the most basic services, and their major concern was the need for critical equipment and services such as maternity.
The year 2022 faced cash challenges and this led to the inadequacy of critical medical supplies.
However, with the funds that we have availed, 14% of the required medicines were procured.
… The ministry takes note of the state of the infrastructure at some of the health institutions.
To address this, the ministry was allocated $18 billion, however, only 2,8 billion was disbursed.
I want to clarify this, for the health posts, we should have 1 700 ward-based health facilities if we are to give attention in terms of healthcare to every Zimbabwean.
</blockquote>
Zimbabwe’s per capita (per person) spending on health is said to have dropped from US$45 in 2021 to US$20 this year.
The World Health Organisation recommends a per capita health expenditure of at least US$84 per year.
Meanwhile, Zambia’s 2022 per capita spending on health is US$85, South Africa (US$570 per person), and Malawi (US$35). | <a href="https://www.newsday.co.zw/health/article/200002559/treasury-starved-hospitals-of-medicines-chiwenga">NewsDay</a>

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