Finance Minister Mthuli Ncube on Thursday announced that no supplementary budget would be allocated in the latest Mid-Term Budget Review, stating that Treasury has enough fiscal space to carry out programs through the end of the year.
Presenting the review under the theme, "Enhancing Drivers of Economic Growth and Transformation Towards Vision 2030," Ncube highlighted that revenue collection in the first half of the year exceeded expectations, providing sufficient funds for planned projects and programs.
"Government collected ZiG137.8 billion in revenue during the first six months of the year against expenditure of ZiG123.6 billion, generating savings that were channelled towards servicing public debt and clearing arrears owed to service providers.
"VAT remained the largest source of revenue, contributing 28.3% of collections, followed by personal income tax at 16.6% and corporate income tax at 13.8%," he said.
Keep up with the latest headlines on WhatsApp | LinkedIn
While some view this as a strong commitment to fiscal discipline, the announcement casts uncertainty over the provision of basic social services like education and healthcare, especially as returning citizens from South Africa and a looming El Niño-induced drought place additional strain on communities.
"The economy continued to benefit from macroeconomic stability, with annual inflation averaging 4.2% during the first seven months of 2026 after slowing sharply from nearly 96% a year earlier. GDP growth is forecast at 5% this year following an 8.3% expansion in 2025, supported by strong mineral prices, improved agricultural output and reforms aimed at reducing the cost of doing business," Ncube added.
Gold production is expected to increase to 55.6 tonnes this year from 50 tonnes in 2025, while lithium exports surged nearly 230% in the first half of the year to US$782.2 million. Manufacturing capacity utilization is also projected to improve to 63.5%, supported by investment and funding from the Industrial Development Fund.
Zimbabwe's external financial position also improved, with foreign currency receipts rising 47.8% to US10.7billion in the first half of the year, and the current account shifting to a US$10.7 billion in the first half of the year, and the current account shifting to a US$ 616.3 million surplus from a deficit the year before.
Merchandise exports grew 41.6%, helping increase usable foreign exchange reserves to US$1.6 billion by June.
Ncube noted, "The conflict in the Middle East reduced fuel tax collections, costing government more than US$74 million in lost revenue," while preparations are underway for a possible El Niño-induced drought during the 2026/27 agricultural season.
Sign up for free AllAfrica Newsletters
Get the latest in African news delivered straight to your inbox
To maintain infrastructure investment without adding pressure to the budget, the government plans to establish an Infrastructure Development Fund that will attract financing from domestic and international lenders.
As part of this effort, Treasury has secured a US$400 million facility with local financial institutions to complete the remaining section of the Harare-Beitbridge Highway and upgrade the Harare-Chirundu and Bulawayo-Victoria Falls roads.
