Zimbabwe’s economy is set to grow by 5.5 percent in 2022 on account of anticipated improvement in sectors of mining, manufacturing, construction, agriculture and tourism, Finance and Economic Development Minister, Prof. Mthuli Ncube has announced in his 2022 National Budget presentation.
The growth however reflects a slowdown of 2.3 percentage points from the 2021 growth rate of 7.8 percent.
In his presentation, Prof. Ncube indicated that the COVID-19 pandemic remains a key threat with a likelihood of the fourth wave looming large.
A budget spending of ZW$ 927 billion has been put in place representing 18.3 percent of GDP against a revenue target of ZW$ 850.8 billion.
This presents a budget deficit of ZW$ 76.5 billion (-1.5% of GDP) which will be met by borrowings from the domestic market and additional drawdown from the SDRs resources.
“The 2022 Fiscal Policy thrust evolves around containing the Budget deficit in line with the NDS1 and Budget Strategy Paper targets of below 3% of GDP,”
“This deficit level supports macro-economic stability and provides scope for further streamlining of wasteful expenditures in favour of essential growth and productive related spending, with higher spending on infrastructure development and social services delivery,” said the Finance Minister.
The 2022 Capital Budget provides an overall spending plan of ZW$334.2 billion, including devolution of ZWL$42.5 billion.
In this amount, ZWL$156.4 billion is for infrastructure delivery mainly with ZWL$10.9 billion being for capitalisation of State-Owned Enterprises whilst ZWL$23.5 billion has been earmarked for capacitation of line Ministries in order to enhance public service delivery.
“Employment costs are provided at ZW$340 billion which is 40% of Revenues of 6.7% of GDP, while a provision of ZWL$279.2 billion is for non-wage current spending which includes social benefits, use of goods and services, subsidies, other expenses with ZWL$14.4 billion being set aside for interest payments,” said the Minister.
The slowing down of COVID-19 cases and the return to normalcy in the country has given impetus to the economy as key sectors such as the tourism and hospitality industries are on a rebound following over 18 months of inactivity since the pandemic started early 2020.
However, the path which the pandemic is already taking in other jurisdictions and inflationary pressures continue to be threats in the ensuing months.
Monthly-on-month inflation for November stands at 5.74 per cent, a level still too unsustainable.
