HIGHLIGHTS: Here’s your quick read into Mthuli’s 2022 budget

Zimbabwe inflation

Finance Minister Mthuli Ncube on Thursday presented his budget for 2022.

Here are our major highlights from the 2022 national budget presented today.

  • ZWL$927.3 billion budget was proposed. Revenue of Z$850.8bn is expected. The deficit will be funded mostly from domestic borrowings
  • Health, agriculture and infrastructure are getting the bulk of IMF funds
  • Top three votes go to Agriculture (ZW$124bn), Primary and Secondary Education (ZW$124bn), Health (ZW$118bn)
  • Ncube still expects economic growth of 7.8%, but admits that “renewed pressures on inflation and a misaligned official exchange rate and rising international oil prices” may derail projections.
  • There will be a capital budget of ZWL$334.2 billion. Out of this, ZWL$156.4 billion is for infrastructure
  • Annual inflation is projected to end the year between 52% and 58%, up from the revised target of between 25% and 35%.
  • Tax-free thresholds are up from ZWL$10 000 to ZWL$25 000. Tax bands will end at Z$500 000, above which a tax rate of 40% will apply, starting 1 January 2022. The tax-free bonus threshold is up from Z$25 000 to Z$100 000.
  • For USD salaries, the tax-free threshold is up from US$70 to US$100. The tax-free bonus has been increased from US$320 to US$700, with effect from November.
  • Excise duty on cigarettes is up from from 20% and US$5.00/1000 cigarettes to 25% plus US$5.00/1000
  • Withholding tax is up from 10% to 30% from January
  • Capital equipment worth at least US$10,000 can be imported duty-free
  • Fuel imports (Jan-Sept) stood at US$285.1m, down from US$488.6m over the same period in 2020
  • Raw material and machinery imports rose 94% and 50% in 2021, respectively, at US$2.4bn and US$1.3bn
  • Exports were up 19% at US$4.053bn versus US$3.4bn in the months up to September 2021
  • Government will issue USD-denominated Government Bonds of up to US$100 million on the Vic Falls Stock Exchange. The money will be used for infrastructure. The Infrastructure Development Bank of Zimbabwe (IDBZ) and Afreximbank are the Joint Lead Arrangers/Financial Advisors.
  • Between January and September 2021, Treasury paid US$44.2 million to external creditors. These were payments to active portfolios and token payments to international financial institutions and bilateral Paris Club creditors.