Chinamasa’s budget 2017

Ministry of Finance and Economic Development

ZIMBABWE

HIGHLIGHTS

THEME

“Pushing Production Frontiers Across all Sectors of the Economy”

BUDGET THRUST

• Fiscal Adjustment

• Structural Reforms

• Stimulating Productivity Across Sectors

• Poverty Eradication

ECONOMIC PERFORMANCE

• Growth is projected at 1.7%, from 0.6% estimated in 2016;

• Agriculture and mining to drive overall growth with sector growth of 12% and 0.9%

respectively in 2017;

• Inflation projected at 1.1%, from a negative 1.5% in 2016.

• Total revenues are projected at US$3.7 billion;

• Total expenditures are projected at US$4.1 billion;

• Financing gap of US$400 million.

• Government wage bill takes US$3.0 billion in 2017;

• Capital expenditure amounts US$520 million, which is 3.6% of GDP;

• Trade deficit of US$1.537 billion, compared to US$1.985 billion in 2016;

• Debt stock at US$11.2 billion as at 31 October 2016, which is 79% of GDP.

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BUDGET FRAMEWORK

2016 2017 2018 2019

National Accounts (Real Sector)

Real GDP at market prices ( million US$) 12,398 12,605 13,252 14,049

Nominal GDP at market prices (Million US$) 14,165 14,525 15,800 17,061

Real GDP Growth (%) 0.6 1.7 5 6

Household Consumption (% change) -14.4 -13.4 -12.4 -11.4

Gross Fixed Capital Formation (% change) 18.0 19.0 20.0 21.0

Inflation (Annual Average) % -1.5 1.1 1.6 2.1

Government Accounts

Revenues & Grants (Millions US$) 3,521 3,700 4,087 4,384

% of GDP 24.9 25.5 25.9 25.7

Expenditures and net lending 4,562 4,100 4,424 4,777

% of GDP 32.2 28.0 28.0 28.0

Budget balance - 1,042 -400 - 337 - 393

% of GDP - 7.4 - 2.5 - 2.1 - 2.3

Balance of Payments Accounts

Exports of goods and services (million US$) 3,365.8 3,669.5 4,081.1 4,213.8

Imports goods and services (million US$) 5,350.9 5,206.8 5,443.3 5,599.6

Trade Balance (million US$) -1283.9 -826.5 -514.1 -708.3

Deposit Corporations Survey (stock)

Broad Money ( Million US$) 5,151 5,611 6,147 6,771

Domestic Credit ( Million US$) 6,952 7,276 7,685 8,198

Credit to Private sector ( Million US$) 3,713 3,822 4,060 4,319

Credit to Government ( Million US$) 3,062 3,292 3,480 3,751

Credit to other nonbank sectors ( Million US$) 177 162 145 128

2016 & 2017 REVENUE PROJECTIONS (US$M)

2016 Projections 2017 Projections

Total Revenue 3,520.7 3,700.0

Tax Revenue 3,264.6 3,398.3

Personal Income Tax 752.9 763.4

Corporate Income Tax 327.0 338.5

Other Direct Taxes 187.6 197.3

Customs 271.3 287.5

Excise 653.4 674.4

VAT 970.1 1,022.6

Other Indirect Taxes 102.2 114.4

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NON-WAGE BUDGET EXPENDITURES

Health–US$59.1 million

• Support to Hospitals and health centres–US$14.6 million

• Rehabilitation and refurbishment of hospitals–US$17.9 million

• Procurement of medical equipment–US$10 million

• Provision of Maternal and Child Health Care–US$6.9 million

• Preventive Health Programmes–US$3.2 million

• Capitalisation of NATPHARM–US$1 million

Education-US$43.3 million

• Operational support to tertiary institutions–US$1.5 million

• Procurement of teaching and learning materials–US$2.3 million

• Construction of schools and tertiary infrastructure–US$27.1 million

• Teacher capacity development–US$1 million

• Stipend support to tertiary students–US$2 million

Social Services–US$28.8 million

• Basic Education Assistance Module [BEAM]–US$10 million

• Harmonised cash transfer and food mitigation–US$8.1 million

• Health Assistance–US$1 million

• Labour Administration–US$1.3 million

• Support to the disabled, elderly and children–US$2.3 million

Agriculture-US$320.8 million

• Strategic Grain Reserve–US$62.5million

• Inputs for the vulnerable–US$36.5 million

• Command Agriculture–US$65.5 million

• Animal diseases and risk management–US$1.9 million

• Irrigation Development US$6.1 million

• Extension Services US$3.1 million

Energy–US$5 million

• Rural Electrification–US$1 million

• Repowering of Bulawayo Thermal-US$4 million

Water and Sanitation–US$42.2 million

• Dam construction–US$25.8 million

• Water supply for small towns–US$5.5 million

• Urban Wash–US$5 million

• Rural Wash–US$6 million

Transport–US$37.3 million

• Rail–US$3 million

• Road construction–US$19.5 million

• Road rehabilitation–US$3.1 million

• Road grading and spot regravelling–US$1.5 million

• Bridge construction–US$1.8 million

• Construction of toll gates–US$3.5 million

• Aviation–US$4.9 million

ICT–US$12.8 million

• E-Government–$12.4 million

Housing–US$39.4 million

• Institutional housing–US$39.4 million

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TAX PROPOSALS

Support to Industry

• Upward review of duty on textiles in order to level the playing field.

• Rebate of duty on selected raw materials in order to enhance the competitiveness of

domestic industry.

• Removal of luggage ware, wheat flour and school uniforms from the Open General

Import Licence.

Revenue Enhancing Measures

• Additional suppliers to be licenced to supply fiscalised devices;

• Tightening existing legislative loopholes relating to the taxation of intangibles, general

administration and management fees between associated companies, dividends

arising from disallowed interest expenses and a permanent establishment.

• Standard rating of meat products, rice, margarine and potatoes.

• Introduction of heath fund levy of 5 cents for every dollar of airtime & mobile data.

Tax Relief Measures

• Introduction of tax incentives for companies operating in Special Economic Zones.

• Support measures for SMEs through downward revision of presumptive taxes,

facilitation of tax registration, ring-fencing resources to capitalise the Small and

Medium Enterprises Development Corporation.

• VAT exemption for mobile banking services.

• Ring fence importation of 30 luxury buses per annum.

Efficiency in Tax Administration

• Measures to enhance tax administration targeting regulation of clearing agents and

tax consultants as well as publishing of the penalty loading model.

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2017 Provisional Estimates of Expenditure (US$M)

Vote Appropriations Employment Costs

Operations &

Maintenance

Capital

Expenditures Total

Office of the President and Cabinet 98,493,000 58,300,000 18,850,000 175,643,000

Parliament of Zimbabwe 10,263,000 8,600,000 11,850,000 30,713,000

Public Service, Labour and Social

Services 165,019,000 27,750,000 1,020,000 193,789,000

Defence 292,492,000 40,000,000 8,030,000 340,522,000

Finance and Economic Development 162,077,000 81,479,000 37,635,000 281,191,000

Audit Office 1,962,000 1,100,000 200,000 3,262,000

Industry and Commerce 2,472,000 2,920,000 13,155,000 18,547,000

Agriculture, Mechanisation and

Irrigation Development 48,466,000 8,000,000 236,230,000 292,696,000

Mines & Mining Development 4,045,000 900,000 450,000 5,395,000

Environment, Water and Climate 2,210,000 1,100,000 36,790,000 40,100,000

Transport and Infrastructural

Development 8,903,000 1,900,000 45,035,000 55,838,000

Foreign Affairs 17,523,000 12,400,000 2,550,000 32,473,000

Local Government, Public Works and

National Housing 14,847,000 19,900,000 14,960,000 49,707,000

Health and Child Care 222,916,000 29,600,000 29,460,000 281,976,000

Primary and Secondary Education 788,969,000 7,977,000 6,825,000 803,771,000

Higher & Tertiary Education, Science

and Technology Development 172,450,000 5,256,000 23,180,000 200,886,000

Youth, Indigenisation & Economic

Empowerment 13,082,000 3,350,000 760,000 17,192,000

Home Affairs 339,118,000 16,540,000 8,650,000 364,308,000

Justice, Legal and Parliamentary

Affairs 69,594,000 19,375,000 2,410,000 91,379,000

Information, Media and Broadcasting

Services 2,129,000 900,000 300,000 3,329,000

Small and Medium Enterprises and

Cooperative Development 2,261,000 1,720,000 2,150,000 6,131,000

Energy and Power Development 868,000 370,000 5,050,000 6,288,000

Women Affairs, Gender &

Community Development 6,824,000 1,400,000 210,000 8,434,000

Tourism & Hospitality Industry 834,000 1,700,000 140,000 2,674,000

Information Communication

Technology, Postal and Courier

Services 1,245,000 3,000,000 2,110,000 6,355,000

Lands and Rural Resettlement 3,892,000 3,650,000 100,000 7,642,000

Judicial Services Commission 11,030,000 2,069,000 1,000,000 14,099,000

Public Service Commission 12,854,000 4,500,000 1,390,000 18,744,000

Sport and Recreation 1,639,000 1,400,000 1,280,000 4,319,000

Macro-Economic Planning and

Investment Promotion 4,167,000 1,650,000 110,000 5,927,000

Welfare Services for War Veterans,

Former Political Detainees,

Restrictees and War Collaborators 830,000 21,000,000 250,000 22,080,000

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2017 Provisional Estimates of Expenditure (US$M)

Vote Appropriations Employment Costs

Operations &

Maintenance

Capital

Expenditures Total

Rural Development, Promotion and

Preservation of Culture and Heritage 10,031,000 1,500,000 4,220,000 15,751,000

Council of Chiefs 30,000 600,000 2,500,000 3,130,000

Human Rights Commission 1,154,000 597,000 200,000 1,951,000

National Peace and Reconciliation

Commission 699,000 220,000 230,000 1,149,000

National Prosecuting Authority 2,416,000 1,000,000 220,000 3,636,000

Zimbabwe Anti-Corruption

Commission 1,080,000 1,000,000 100,000 2,180,000

Zimbabwe Electoral Commission 6,061,000 3,600,000 100,000 9,761,000

Zimbabwe Gender Commission 435,000 550,000 120,000 1,105,000

Zimbabwe Land Commission 709,000 697,000 140,000 1,546,000

Zimbabwe Media Commission 200,000 430,000 40,000 670,000

TOTAL 2,506,289,000 400,000,000 520,000,000 3,426,289,000

Debt Service: Interest Bill 180,000,000

Pension 477,600,000

Other Constitutional & Statutory

Appropriations 16,111,000

Total Expenditure & Net Lending 2,506,289,000 400,000,000 520,000,000 4,100,000,000

Repayment of Loans - - -

Total Expenditure & Net Lending

Including Loan Repayments 2,506,289,000 400,000,000 520,000,000 4,100,000,000

Harare

8 December 2016