Government's forecast of 6 percent economic growth for next year has undergone a stress test to assess its realism, taking into account various fiscal risks, including exchange controls and natural disasters, along with other macro-economic fundamentals.
Finance, Economic Development and Investment Promotion Minister Professor Mthuli Ncube said the 2025 National Budget sought to build resilience and the Government forecast a brighter future going into the New Year.
Prof Ncube said this in Senate last week while responding to concerns raised by lawmakers during a debate on the 2025 National Budget that the Legislature has since passed.
"Have we taken care of risks that might arise as we focus on such a brighter future for the country into next year? We have done a stress test of the Budget by considering various scenarios to say, suppose we have some macro-economic risks and maybe we are wrong in terms of our Gross Domestic Product forecast of 6 percent for whatever reason, suppose it turns out to be 2 percent lower and what will happen and we do those simulations.
"We also look into how, for instance, exchange rate risks could impact the budget. We look into the impact of commodity risks and some other contingent liabilities that come out of nowhere but impact the fiscal position. We also consider the impact of natural disasters that are unforeseen and some public debt risk," he said.
Prof Ncube said the national budget also focussed on building resilience and not necessarily as a recurrent budget alone as what was suggested by some Senators.
Earlier, some Senators had said the budget was skewed towards more recurrent expenditure as opposed to investment or capital expenditure thereby compromising its resilience.
"Recurrent expenditure can have resilience characteristics. Resilience is quite broad. Our expenditure on the Pfumvudza/Intwasa Programme speaks to building resilience in our rural areas so as to cushion our rural farmers from the vagaries of climate. By the way, 60 percent of Pfumvudza/Intwasa farmers are women. So, you can see the impact of that Budget expenditure item on the gender equity issues, but also our overall social protection on the budget, whether it is Basic Education Assistant Module (BEAM) or whether it is looking at the grey mitigation programme, all those social protection programmes which are just simple recurrent expenditure programmes, our items speak to resilience," he said.
Both recurrent expenditure and investment can have resilience characteristics, said Prof Ncube.
"The resilience characteristics from infrastructure will come from investment in irrigation. I think that is an obvious one or indeed, building dams, but with a view of evacuating the water onto the fields and eventually irrigation. So, all of that is a resilience which the budget is supporting," he said.
Prof Ncube said in terms of foreign currency receipts, he acknowledged the role played by the diaspora adding he expected them to send more money to Zimbabwe next year.
He said the Treasury had also made initiations to stimulate domestic car production through the retention of duty on bus imports.
"We believe now we have quite a lot of buses and we have re-introduced duty on commuter buses. We are supporting a programme of incentivising the import of knocked down kits which will then be assembled at facilities such as Willowvale, Deven Engineering or Quest among others. We are encouraging the use of greener cars in order to reduce pollution," he said.
Zanu PF Chief Whip, Cde Pupurai Togarepi expressed optimism that the Budget will cater for key Government operations necessary to achieve Vision 2030.
"The vision aims to achieve an upper middle-income economy by 2030 and the Budget spoke to this vision by providing vital resources to productive sectors of the economy.
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"As you are aware, our productive sectors include agriculture, mining, industry and commerce and tourism. These sectors were adequately equipped to ensure they continue to contribute to economic growth which is projected to leapfrog by 6 percent by the end of 2025.
"Other sectors such as transport and energy which provide essential infrastructure and power to facilitate industrial activities were also catered for and we expect the energy generation capacity to improve by midyear," he said.
Cde Togarepi noted that through the Finance Bill, the Budget tried to strike a balance between reducing the tax burden on companies while also ensuring that the Government had adequate funding to run its operations.
"No country can prosper without its citizens paying taxes. MPs encouraged the Minister to widen the tax base. A culture of paying tax is key to economic development," he said.
