Home » Business » ’Zimbabwe’s Economic Outlook Murky’

ZIMBABWE should accumulate capital for the growth of the economy through private and public sector investments as the outlook remains murky for meaningful tax revenue, a leading research firm has aised.

Statistics from the Zimbabwe Revenue Authority (Zimra) showed that the tax collector had collected US$834,6 million in the first quarter, surpassing its target by 2%.

The target for the first quarter was US$817,9 million.

In a note to investors, MMC Capital Research said although there was an improvement in revenue collected, the outlook was murky.

MMC said while company tax revenue’s contribution to total revenue had improved to 13% in 2014 from 10% last year, it was projecting less contribution in the full year to December 31 “as more companies will likely scale down their operations or ultimately close”.

MMC said improving the investment rate was a challenge in Zimbabwe because of low levels of disposable incomes which is making it difficult to generate significant savings.

“The low savings rate contributes to a vicious cycle of poverty — low savings leads to low investment, which leads to slow GDP growth, hence low revenue collections for the country,” it said. “To break the cycle of low savings, the government needs to fine-tune its policies so as to attract foreign investments as postulated by the literature on economic growth.”

Zimra’s commissioner general Gershem Pasi said surpassing the target was a miracle given the poor performance of the economy.

Analysts say liquidity constraints and low industry capacity utilisation, among other factors, continue to put pressure on the tax base.

Source : Zimbabwe Standard

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