According to the 2019 Budget Strategy Paper (BSP) presented by Finance and Economic Development Minister Professor Mthuli Ncube and approved by Cabinet last week, agriculture is the major contributor to the budget deficit.
Zimbabwe’s cumulative budget deficit for the period January to June 2018 stands at US$1.21 billion (4,7 percent of GDP), against a cumulative target to June of US$388.7 million. Ncube said of the US$1,8 billion Treasury bills issued from January to July 2018, about US$361 million went towards agriculture funding. Said Ncube:
Expenditure on agriculture has been one of the major components driving the budget deficit recently. Expenditure on the sector reached US$1.1 billion as at August 2018, against an annual budget target of US$401 million. Of this, US$238 million went towards Command Agriculture, US$263 million towards the Vulnerable Input Support Scheme and US$505 million to grain procurement. While on the face of it, the TBs issued towards Command Agriculture are a private debt, however, in view of the high default rate by farmers under Command Agriculture, it effectively means that it is Government expenditure. In view of the implications of the existing model of financing, there is a need to revisit the mechanism, with a view of lessening the fiscal burden which has a destabilising effect on the macro-economic environment.