The economy is set to contract to -4.5 percent against original projection of 3 percent in 2020 due to the impact of a successive drought, currency volatility and Covid-19 outbreak, Finance and Economic Minister, Mthuli Ncube said this afternoon.
This has been necessitated by under-performance of productive and essential service sectors due to the aforementioned challenges.
Agriculture output is set to record -0.2 percent growth against initially projected 5 percent improvement due to a reduction in crop out.
Mining sector will also shrink to -4.1 percent due to lower appetite in global consumption of minerals.
The manufacturing sector will have the biggest fall, with a revised projection of -10.8 percent from the 1.9 percent initially projected.
Hotel and Distribution industry will capitulate -7.4 percent due to a significant drop in hotel occupancy as visitors remain restricted. This is reflected by a decline to 3 percent in room occupancy in the month of March when lockdown restrictions were effected from 33 percent that had been recorded in February, prior to Covid-19 response.
However, most notably there was no revision of the initial ZWL$ 66.3 billion budget and neither was there an improved allocation in the previously availed ZWL$ 18.2 billion stimulus to hedge businesses against the vagaries of the Covid-19 pandemic.
This could be partly be due to a shortfall in resources mobilisation.
Government stretched its begging bowl asking for US$ 300 million, in return, development partners could only pledge US$ 202.6 million.
In terms of the budget exploitation, from January to June about 46 percent was spent amounting to ZWL$ 30 billion.
This was spent on recurrent expenses (ZWL$ 19.7 billion), Capital expenditure (ZWL$ 9.3 billion), Local Authorities allocations (ZWL$ 453 million) and interest payments on debts (ZWL$ 400 million).
54 percent of budget is yet to be spent and a ZWL$ 800 million budget surplus was achieved for the first six months of 2020.
Government has also spent ZWL$ 902 million on social protection in various segments including drought mitigation program, basic education assistance (BEAM), elderly persons, health assistance (excluding Health budget) and Covid-19 response.
750 000 food insecure families have received assistance amounting to ZWL$ 404.2 million.
Government expects inflation to drop to 300 percent by end of year from 785 percent reached in May.
The Finance Minister also put a host of fiscal interventions to try and boost the economy and encourage productivity and revenue consolidation.
Custom duty on top dressing fertilizers of 120 000 metric tons on accredited dealers for the 2020-21 summer cropping season will be exempted.
Pay-As-You-Earn (PAYE) tax free threshold has been raised to ZWL$ 2000 to ZWL$ 5 000 per month.
Those in the ZWL$ 5 001 up to ZWL$ 100 000 salary bracket will have the highest marginal rate of 40 percent.
Domestic tourist accommodation will be exemption from VAT with effect from August 1, 2020.
Incentives to the Victoria Falls Securities Exchange which includes a lowered rate of 5 percent on dividend payable to non-resident investors and exemption from corporate income tax on companies have been put in place.
All business dealers will have to configure their automated fiscal devices to capture all transactions in all tendered currencies.
Zimra is to be empowered to start using Automatic Smuggling Surveillance Drones to curb smuggling.
Intermediated Money Transfer Tax (IMTT) free threshold has been reviewed from ZWL$ 100 to ZWL$ 300 with the free threshold extended to foreign currency transactions not exceeding US$ 5.
263Chat Business will make an in-depth analysis into the Mid-Term Budget Statement tomorrow.
