Treasury exceeds expenditure by $410m
TREASURY exceeded its expenditure target for 2016 by $410 million between January and September this year due to pressure from debt servicing and unbudgeted grain imports as a result of drought.
Finance and Economic Development Minister Patrick Chinamasa yesterday said carry-overs of 2015 bonus payments into 2016 and payment of December 2015 salaries for the rest of the civil service in January 2016 resulted in a fault start financial year for the Government.
The El-Nino induced drought, which necessitated grain importation of 336 309 tonnes at a total cost of $134.5 million, has been a major impediment.
“These activities pushed expenditures to $3.4 billion against a target of $2.99 billion as at September 2016. This resulted in expenditure overrun of $410 million for the period January to September,” he told legislators during a 2017 pre-budget seminar in Bulawayo.
“Recurrent expenditure accounted for $2.9 billion (84 percent) out of the total expenditures of $3.4 billion. Employment costs alone accounted for $2.4 billion (95 percent) of revenue of $2.5 billion as at September 2016.”
Minister Chinamasa said the prevailing expenditure situation was undesirable as it exposed the country to a number of risks that include domestic debt trap and accumulation of arrears to salaries and service providers, among others.
“The high recurrent expenditures inclusive of employment costs renders the country highly consumptive and hence anti-developmental.
Cumulative expenditure to September amounted to $3.48 billion against a target of $2.99 billion,” said Chinamasa. “Major expenditure drivers were employment costs, grain procurement and debt servicing.”
Minister Chinamasa said reducing the wage bill was a huge challenge as he urged focus on increasing productivity so that the country can stabilise.
He said revenue under-performance, coupled with inescapable expenditures, will result in a higher financing gap. Cumulative expenditures to year end are estimated at 4.69 billion.
“This is against a revised revenue projection of $3.65 billion. This will widen the financing gap excluding debt repayment to $1.04 billion from $150 million initially anticipated. The gap becomes wider when additional obligations arising from debt servicing are considered,” said the minister.
He stressed the need to curb imports and boost exports so as to tame the trade deficit.
“To reduce this trade deficit, Government will continue to implement import substitution, and restrict the importation of non-essentials so as to preserve the stock of our foreign currency in the country. Such measures include the Statutory Instrument 64 of 2016,” said the minister. — @pamelashumba1