Budget Review: Govt speaks to real issues
THE 2019 Mid-Year Budget Review and Supplementary Budget presented by Finance and Economic Development Minister Professor Mthuli Ncube yesterday, has reaffirmed Government’s desire to improve the life of its citizens by balancing between viability of companies and the need to cushion vulnerable members of society.
Prof Ncube announced a raft of measures aimed at increasing disposable incomes for citizens, creating employment through reviving companies, infrastructure development and incentives for Special Economic Zones (SECs).
Government has also increased the electricity tariff to allow ZESA to raise funds for infrastructure refurbishment and also support importation of electricity from regional utilities to avert load-shedding.
The tariff review favours domestic consumers who are now going to pay an average $27c/kWh from $9,86c/ kWh while non-exporting businesses will pay an average of $45c/kWh. Before this review, companies were now paying about USc1, giving them an opportunity to make super profits given that they were not increasing salaries and wages.
But the best news of the day goes to employees, especially low income earners after Government widened the tax-free band from $350 to $700, in a development that frees more disposable income for citizens who have been hit by inflation.
The move, which shows Government’s determination to ensure citizens get due reward for
their labour, comes a few weeks after Government agreed to pay its employees a once-off cushioning allowance of $400.
Further, tobacco farmers have been given a huge relief regards the two percent intermediated money transfer tax. Prof Ncube eliminated double taxation on transfer of funds for the purchase of tobacco by tobacco buying companies to auction floors and on transfer of funds by contracting companies and auction floors to farmers for deliveries of tobacco.
In terms of creating employment, Prof Ncube said production and productivity enhancement across all sectors of the economy will receive due attention to complete the transformative framework of the Transitional Stabilisation Programme (TSP).
The plan entails deepening competitiveness, investment mobilisation underpinned by re-engagement efforts aimed at resolving the external debt overhang and improving relations with the global community of nations.
Government has also retained the clothing manufacturers’ rebate to assist the sector in reducing the cost of production and increase the competitiveness of locally-produced goods in the export market.
The rebate was due to expire this year after being introduced in 2013. However, to prevent abuse of the facility, the Zimbabwe Revenue Authority (Zimra) will undertake a comprehensive post-clearance audit on the use of the facility by beneficiaries.
Prof Ncube also suspended duty on commercial tyres to allow imports in the face of local production challenges. This follows concerns by some local companies that were struggling to purchase spares such as tyres for their production vehicles, resulting in low capacity utilisation.
Further, Government has added antimony oxides; other nitrates; vitrifiable enamels and glazes, engobes (slips) and similar preparations; polyurethanes and other gaskets, washers and other seals, among others, on the list of components that can be imported duty-free to capacitate electrical manufacturers.
This will see more jobs being created for citizens in line with Vision 2030 aimed at creating decent jobs and transforming the country to an upper middle income society with a per capita income of US$3 500. Apart from attempting to increase industrial capacity, Government indicated that it remains alive to the challenges confronting the country including drought.
Prof Ncube said Government will procure grain to mitigate the effects of drought, with $630 million having been set aside for local grain purchases and logistics.
President Mnangagwa has repeatedly indicated that no one will die of hunger, and the move to procure grain is in that spirit. Zimbabwe requires about 1,8 million tonnes, but a yield of 852 000 tonnes is expected from the 2018/2019 summer cropping season.
But with the agriculture sector expected to contract by 15,8 percent for the 2018/2019 summer cropping season due to bad weather conditions and the devastating Cyclone Idai, Government is setting aside $1,67 billion to support cultivation of strategic crops of grain, soya beans and cotton under the Vulnerable Households Input Support Scheme and the Special Maize and Soya Bean programmes.
So serious is Government to ensure a rise in agricultural output that it has decided to take up the role of financing farmers under the Special Maize and Soya Bean programmes, which are ordinarily supported by private financiers.
In the mining sector, Government plans to unveil a comprehensive strategy and roadmap towards a US$12 billion industry in the second half of the year.