23 June 2014

Zimbabwe: Pay Increase Dents Govt Financials

Happiness Zengeni — Government returned to deficit in April after an under-performing revenue line and an increase in employment costs. Latest figures from the Accountant-General's Office show that Government reported a cumulative deficit of $33,5 million in the four months to April from a surplus of $52,06 million in March.

Total revenue including retained was at $1,12 billion against a target of $1,17 billion, a negative variance of $55,14 million. Tax revenue was below target at $1,02 billion, missing the $1,106 billion target by $82,42 million. Tax revenue was mainly weighed down by lower than expected Value Added Taxes (VAT), royalties in tandem with the decline in mineral production and under-performing customs duties.

The total value of mineral production excluding diamonds in the four months to April dropped 8,54 percent to $596,42 million against the same period last year, weighed down by the weaknesses in international gold prices and low investment in the sector.

According to latest figures from the Chamber of Mines availed by the Finance Ministry; gold production was 4 484,5kg with a total value of $183,122 million. This is below the 4 500,21kg produced last year with a total value of $224,73 million.

Cumulative royalties were at $41,01 million against a target of $46,16 million but overall tax on income and profits widely beat its expectation at $442,7 million, a positive variance of $27,63 million. Zimbabwe Revenue Authority collected more from individuals and companies.

Commissioner-General Gershem Pasi, however, said revenue collection for the second quarter of the year is on target as the tax collector continues to intensify efforts to collect revenue.

"I can't give specific figures off hand but we are on target, as long as we are sure that the trend is indicative of us meeting the target for the quarter," said Mr Pasi.

Zimra will publish the revenue performance report for the second quarter after June 30 2014, which marks the end of the quarter.

Non tax revenue amounted to $66,43 million against a target of $72,81 million.

Total expenditure including retained grants was at $1,12 billion, a figure below the budgeted $1,17 billion. Employment costs were up to a cumulative $671,07 million. Month on month, April employment costs were at $225,32 million, a growth of 39 percent against the March cost of $162,03 million. This follows an increase in civil servants' salaries in April, which were backdated to January. The increase, though welcomed by the employees, led to an increase in Government debt as loans of $40 million were taken during April.

Government, however, managed to repay $24,1 million of its domestic debt. Cumulatively Treasury has repaid $83,86 million of the local debt. Total domestic financing in the four month period was $34,6 million.

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