Let’s keep our fortitude against Covid-19 and economic challenges
FINANCE and Economic Development Minister Professor Mthuli Ncube yesterday presented the 2020 mid-term budget review to Parliament, recognizing the progress and challenges of the past six months and looking into the second half of the year with guarded hope.
The past six months have been challenging indeed. As the year started, it was getting clear that the summer harvest was going to be poor as rains had fallen erratically and in small amounts in most parts of the country. That was the first sign that the year was going to be challenging for our agro-based economy.
Around the same time, the Covid-19 pandemic broke out in China and soon spread to Europe and the US. The countries locked down their economies. These being key markets for many locally produced products and being source markets for tourism and a number of key imports, the challenges that started with a drought looked to worsen because of Covid-19.
In March, Zimbabwe recorded its first Covid-19 case. Since then, cases have been increasing but fortunately, they have not spiked out of control for now. To mitigate the adverse impact of the pandemic, the Government has had to spend $1,9 billion towards the Covid-19 Preparedness and
Response Plan, focusing on increasing testing capacity, case management, infection prevention and control, including facilitating the opening of schools.
In the 2020 budget, the minister had projected a three percent growth in the economy, but due to Covid-19, the economy is seen contracting by -4.5 percent. Inflation has been rising sharply since February. It is now at 785 percent but the minister expects it to slow down to 300 percent by the end of the year.
Largely, the foregoing is the challenging background to Prof Ncube’s mid-term budget review.
It is clear that the next six months will not be easy given the obtaining Covid19 situation, which is why the minister has a downbeat economic projection. We therefore urge our people to continue with their fortitude against the economic challenges, and vigilance against Covid19. We must keep infections at a low level by upholding the Government’s lockdown measures and maintaining personal hygiene all the time.
We draw a number of positives from the minister’s delivery yesterday.
The Government managed to spend within its means, so yet another budget surplus was achieved. For the period January to June 2020, a budget surplus of around $800 million was realised. Also, the Government has managed to cater for 760 000 food-insecure households by giving them the much-needed assistance during the first half of the year both in rural and urban areas. Between January and June, total social protection expenditure amounted to $902,2 million against targeted expenditure of $1,253 billion. The minister awarded some tax relief to workers when increasing the tax-free threshold to $5 000 from $2 000 monthly with those earning above $100 000 monthly paying 40 percent tax.
In terms of infrastructure projects, Prof Ncube said they are continuing, among them the Harare-Beitbridge Road which got $321 million leading to much faster progress in construction work. The target, he said, is to achieve 200km by the end of the year.
As we have said, the next six months will not be easy but we hope that the measures the minister enunciated yesterday will ameliorate the prevailing challenges. The widening of the tax-free threshold will assist low income earners take home a larger chunk of their salaries. That was a positive decision by the minister. However, at the same time, we have to state that at $5 000 per month the impact of the decision will not be that big if one considers the prevailing prices. It could have been far much better, in our view, if he had set it at $10 000 per month.
In regard to social protection expenditure, we welcome the fact that 760 000 foodinsecure households have been reached. Indeed, there are many compatriots who cannot help themselves and can only get by with outside assistance, particularly from their Government. But the neediest people in the country may well be more than 760 000 who also need Government assistance. Covid-19 has impoverished many citizens so we expect more households to be enrolled so that they benefit from Government social protection programmes.
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