Govt’s $700m budget surplus raises eyebrows

Finance Minister Mthuli Ncube

Government has reported a massive $732 million budget surplus for December, as collections reached record highs, but below normal expenditure for the month cast doubts on the figures.

A Treasury update on policy reforms dated February 27, 2019, shows December revenue collections at $832.8 million, against expenditure of $100.1 million, giving a $732.7 million surplus. A 2% tax on electronic payments, introduced in October last year, earned government $103.8 million in December.

Finance Minister Mthuli Ncube has instituted a series of measures to cut government spending, including stopping Treasury Bill issuances, sacking 3,188 youth officers and withholding spending on vehicles for government officials including ministers. He has also expanded government’s revenues through a 2% tax on electronic payments, introduced in October last year, as well as a huge jump in fuel excise duty, which went up in January 2019.

“As a result of the above expenditure management and revenue enhancing measures, monthly budget deficits declined from US$651.2 million in August 2018 to US$39.8 million in September and US$242.1 million in November. Preliminary indications point to a surplus of US$732.7 million in December 2018,” the finance ministry says in the update.

However, it is the unexplained reduction in expenditure, which averaged $705 million and ranged between $320 million and $1,038 billion in the 11 months of the year, to a mere $100 million in December, that raises more eyebrows than the doubling of revenue between the months of November and December.

A Ministry of Finance official reached by newZWire suggested the low December expenditure could have been because government paid wages for the month in November.

The wage bill constitutes the biggest part of government expenditure. The bill is projected to rise to $4.050 billion from $3.8 billion in the 2019 budget.

The 2% tax generated $166.2 million for government in 2018, following its introduction in the last quarter.

Government hauled in $98.5 million from the tax in January, and still expect it to contribute $600 million towards projected total revenues, including retained revenue from various quasi-state funds, of $6.6 billion.

According to the government data, the 2018 budget deficit came in at $2,37 billion, less than 10% of the rebased US$25.8 billion GDP.

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