Home » Governance » Govt Records Surplus in Q1

Government overturned a February deficit to post an operating surplus in March following the floating of Treasury Bills in the two months.

Latest figures from the Accountant-General’s Office show that Government reported a surplus of $52,06 million from a deficit of $28,78 million taking the cumulative total for the three months to March to a positive $39,03 million.

In the period, total domestic financing amounted to $16,77 million after the issuance of $76,5 million worth of Treasury Bills. In February, $26,5 million TBs were issued while a further $50 million were taken up by Old Mutual and NSSA. From the financing, Government managed to make domestic debt repayments of $59,72 million.

However, analysts have warned Government against “indiscriminate” use of Treasury Bills to fund recurrent expenditure as this could crowd out the private sector from the limited liquidity available in the market.

Confederation of Zimbabwe Industries president Mr Charles Msipa recently said although industry welcomed the clearing of FCA balances through TBs by the Reserve Bank of Zimbabwe, the federation was concerned that excessive use of the instruments could force the private sector out.

“There is so much capital available in the country so typically if the Government gets into a deficit and gets into a habit of relying on that liquidity to finance the deficit it means that there is less money available to the other players in the productive sector for lending,” said Mr Msipa.

Market analyst Mr Jerome Negonde said when the Government issues new bonds to finance current expenditures an obligation is created to collect future taxes to pay both the principal and interest on those bonds. This, he says will create a burden on taxpayers.

According to the Accountant-General’s report, tax revenue was 7,6 percent below the targeted $817,86 million at $756,35 million. Revenue from investments and property was also below the target of $18,54 million at $17,79 million, a negative variance of 4,1 percent.

In the period, the Government collected $17,27 million in March only mainly made up of dividends. Total fees collected amounted to $26,49 million.

Permanent Secretary in the Ministry of Finance Mr Willard Manungo told a Parliamentary Committee that traditionally when the year starts, revenue collection tends to be lower and picks up during the latter half of the year.

Total current expenditure amounted to $730,48 million which was below the targeted $805,5 million, a variance of 9,3 percent as the Government continues to adhere to the requirements of the International Monetary Fund’s Staff Monitored Programme. Employment costs were a cumulative $445,74 million for the period.

Interest on the foreign debt of $6,4 billion was a cumulative $12,75 million. The debt is largely owed to the IMF, World Bank and African Development Bank. Head of Zimbabwe Aid and Debt Management Office Mr Andrew Bvumbe last week said, Zimbabwe needed to pass IMF’s staff monitored programme test to earn debt relief. The next SMP evaluation is due in July this year.

Mr Bvumbe stressed that Zimbabwe needed urgent debt resolution to entertain any hope of sustained economic growth and IMF was the gate keeper of the exit to the ultimate goal.

Source : The Herald