Mthuli revises GDP, budget numbers to reflect currency shift

Finance Minister Mthuli Ncube

Finance Minister Mthuli Ncube’s statement to Parliament on Wednesday was short on details of how government intends to tackle the multiple crises buffeting the economy.

He, however, presented new budget and GDP figures, following the official return of a local currency in February. His numbers also showed a huge fiscal surplus for the first quarter, thanks to the expanded tax base as well as restrained spending by Treasury.

Ncube had based his 2019 budget on the US dollar currency the country has used as its official currency since 2009. But the numbers made little sense as the economy was effectively running on a local currency which was, however, unacknowledged officially at the time of the budget presentation last November.

In a ministerial statement on the state of the economy presented late in the day, Ncube said government expenditure is now projected at ZWL$12.2 billion in 2019, from US$8.2 billion in the initial budget. Revenue is now expected at ZWL$9.3 billion, against the earlier figure of US$6.6 billion. This implies a budget deficit of 4.1% of GDP, below the targeted 5%.

GDP, which was rebased to US$25 billion in 2018, was revised to ZWL$42.8 billion for that year.

In 2019, GDP is projected to reach ZWL$70.3 billion, but the finance minister warned that the drought, Cyclone Idai, foreign currency shortages as well as electricity and fuel shortages would weigh on the economy this year.

Speaking on a day when official data showed annualised inflation had reached 75.86%, Ncube repeated his projection that inflation would start coming off from October 2019, as the month-on-month rate for that month is expected to be lower than the spike recorded during that month last year.