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HARARE ANNOUNCES MEASURES TO ARREST WIDENING BUDGET DEFICIT

HARARE-- The Zimbabwe government has announced measures to cut expenditure and to raise revenue to arrest the widening budget deficit.

With no outside financial support unlike most African countries, Zimbabwe is totally reliant on internal revenues for its expenditure but failure to contain costs had over the years seen the authorities resorting to heavy borrowings to finance government activities.

Finance and Economic Development Minister Professor Mthuli Ncube said here Monday the borrowings had seen the government's domestic debt ballooning in the last few years to nearly 10 billion US dollars.

The high (budget) deficit has ignited the expansion of domestic debt from 275.8 million USD in 2012 to current levels of 9.5 billion USD against 7.4 billion USD in external debt, he said.

He said moves were in place to limit government borrowings from the Reserve Bank's overdraft facility as well as through unsustainable use of treasury bills which was pushing out the private sector. The Government owes the central bank more than 2.3 billion USD, way above the statutory limit of 763 million USD.

The government has also used Treasury Bills to raise more than 7.0 billion USD as at

the end of August this year compared with 2.1 billion USD in 2016.

This is a cost to government. Excessive issuance of short-term debt instruments at high interest rate also crowds out the private sector and compounds the increase in government recurrent expenditure, Ncube said.

He said the Treasury would resort to measures which promote private sector participation to finance socio-economic development programmes such as public private partnerships (PPPs) or government guarantees to financial institutions.

Meanwhile, consumers will have to fork out more for electronic transactions as the government reviewed the cost per transaction to five cents from two cents for every one dollar transacted. Ncube said the move would expand the tax collection base given the rise in electronic transactions across the economy.

Cash shortages have over the years forced consumers to resort to electronic money, with the number of annual transactions having shot up from around 50 million four years ago to more than 1.7 billion currently.

Source: NAM NEWS NETWORK