NewsSouthern AfricaZimbabwe to cut budget deficit by half in 2018: Treasury

Thu,23Nov2017

Posted on Wednesday, 18 October 2017 10:07

Zimbabwe to cut budget deficit by half in 2018: Treasury

By Reuters

Zimbabwean President Robert Mugabe shares a light moment during his meeting with South African President Jacob Zuma in Pretoria, South Africa, Oct. 3, 2017. Photo: Themba Hadebe/AP/SIPAZimbabwe expects to cut its budget deficit by half next year to 4 percent of gross domestic product, while economic growth will slow down to 3 percent, according to a treasury document seen by Reuters on Tuesday.

 

The southern African nation has struggled to control runaway expenditure, especially on salaries, which accounted for more than 90% of the national budget last year.

The country dumped its currency for the U.S. dollar in 2009 because it was wrecked by hyperinflation but it is now running short of dollars as well as quasi-currency "bond note" introduced last year to ease cash shortages.

The Treasury document said the budget deficit should, however, fall from a target of 8.4% this year.

"The 2018 budget strategy paper proposes targeting halving the budget deficit to 4% of GDP and subsequently to move to a balanced budget by 2020," Treasury said.

US Dollar crunch

The government expects an improvement in tax collections next year to increase revenues while reducing the share of salaries to 80% of the budget, from 85% this year.

Without funding from foreign lenders like the International Monetary Fund and World Bank, Zimbabwe has relied on domestic taxes and borrowing from local banks to fund the national budget.

The country's foreign and domestic debt would increase to $14bn in 2018 from $13bn this year, Treasury said.

A U.S. dollar crunch has seen Zimbabwe struggle to pay for imports and has caused acute cash shortages in the economy.

On Tuesday the agriculture minister said Harare will ban the importation of fruit and vegetables to preserve scarce dollars.

 



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