Govt Made An Over-expenditure Of 15% Between January & June 2019 - Mthuli

The Minister of Finance and Economic Development Minister, Mthuli Ncube on Wednesday afternoon presented the midterm supplementary budget.

He revealed that total Government spending for the period January to June 2019 was ZWL$4.2 billion against a target of ZWL$3.7 billion, which is ZWL$532 million over-expenditure (15%). Below are highlights from his presentation:

• Monthly revenue collections for the first 6 months generally performed above targets by an average of $139.9 million to give cumulative revenues of $4.99 billion, against a target of $4.15 billion, giving a positive variance 20.2%.
• On the other hand, total Government spending for the period January to June 2019 was ZWL$4.2 billion against a target of ZWL$3.7 billion, which is ZWL$532 million over-expenditure (15%).
• For the half-year period, a budget surplus (savings) of ZWL$803.6 million was realised. This surplus/savings clearly reflects the entrenchment of fiscal discipline in line Ministries and Government Departments.
• In 2018, we witnessed a dramatic increase in domestic debt, fed by fiscal deficits of above ZWL$2 billion primarily financed by the issuance of Treasury Bills and Central Bank overdraft.
• Total Treasury Bills issued amounted to ZWL$ 230m, sorely for budget support and cash-flow management. Going forward, Government borrowings for Budget purposes will observe the new TBs Auction Framework in order to promote transparency and the rebuilding of market confidence.
• The current account, for the first time since the adoption of the multi-currency regime in 2009, registered a surplus in the first quarter of 2019.
• A surplus of US$196 million was registered in the first quarter of 2019 compared to a deficit of US$491 for the same period in 2018, constituting a major improvement in the current account.
• Govt was running high fiscal deficits, which were monetised through the issuance of TBs and overdraft at the Central Bank. These deficits translated into a significant & uncontrolled expansion of money supply which ended up chasing foreign currency in both the formal and parallel markets.
• The unbridled demand for foreign currency, especially at 1:1 exchange rate between the bond note and the US Dollar, quickly became unsustainable. This prompted the decision to liberalise the exchange rate in February 2019.