CitiZenS Budget: a CitiZenS guide to tHe 2019 nationaL Budget

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CITIZEN’S BUDGET: A CITIZEN’S GUIDE TO THE 2019 NATIONAL BUDGET

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www.parlzim.gov.zw

Published by Parliament of Zimbabwe, P.O Box CY 298, CausewayHarare, ZimbabweTel: +263 242 700181email: [email protected]

© Parliament of Zimbabwe

All rights reserved 2019

Authors: Pepukai Chivore, Asha Jenje and Perfect MashapaEditing and Design: Cathrine Kapswara

Information in this publication can be reproduced, used and shared with acknowledgement of the Parliament of Zimbabwe as Publisher.

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CONTENTS

What is a national budget 4

Budgeting process in Zimbabwe 5

Government Objectives and economic outlook 6

Macroeconomic forecasts and assumptions 7

Government Revenue 8

Expenditure 14

Budget deficit 20

Debt 21

New Measures 23

Expenditure rationalization measures 23

Improving Service Delivery 24

Infrastructure 25

Education and Health 26

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WHAT IS A NATIONAL BUDGET?

what is a national budget?

A government budget is a yearly financial plan presenting the sources of money and spending for a financial year. It is approved by the parliamentarians and is presented by the Minister of Finance to the nation.

It is a way which governments provide for basic necessities like health, education, roads, water and sanitation, and social services.

A government can either have a balanced budget, budget deficit or a surplus. A budget surplus occurs when you have more money than what to spend it on. Whilst a budget deficit occurs when you have less money than what to spend it on. A balanced budget occurs when money collected is the same as money spent.

1.

2.

3.

BUDGET?

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STArTDrAfTING

Of THE

BUDGET

prE-BUDGET

SEmINArS

BUDGET

ExECUTION

BUDGET

ApprOvAL

AUDITING &EvALUATION

SpENDINGGUIDELINES

BUDGET STrATEGy pApEr (BSp)

pUBLIC HEArINGS

mINISTEr prESENTS

THE NATIONAL BUDGETpOST BUDGET SEmINArpArLIAmENT ApprOvES

THE NATIONAL BUDGETpArLIAmENTAry DEBATES

rELEASE Of fUNDS

TO

SpENDING UNITSrEpOrTING

TO

pArLIAmENT

ON SpENDING

STATUSSUppLEmENTAry

BUDGETrEQUESTS

AUDITOr

GENErAL

ASSESSES DEpArTmENTAL

ACCOUNTS AND

pErfOrmANCES

fINISH

WANT TO kNOW NATIONAL BUDGET fOrmULATION prOCESS?How about we play a game of tHe NatioNal budget. lets start. Follow the arrows

The National Budget is produced by the Minister of Finance in terms of Section 305 of the Constitution and Section 28(1) read together with Section 7(2)(a) of the Public Finance Management Act (PFMA). It covers the period 1st January to 31st December.

Section 305 of the Constitution and Section 28(1) of the PFMA requires the Minister of Finance to present the National Budget to Parliament not later than thirty days after the start of the Financial Year.

1) Implementing expenditure according to plan.

2) Accounting for and reporting on actual expenditure and service delivery.

Section 141 of the Zimbabwe Constitution which compels that Parliament: 1) Facilitate public involvement in its legislative and other processes and in the processes of its committees. 2) Ensure that interested parties are consulted about Bills being considered by Parliament, unless such consultation is inappropriate or impracticable.

At this Stage, Parliament has the authority to approve the national budget only after the demands and views of the people are effected into the Bill and by doing so it will be executing its people’s representative role .

Budgetary Stage

Key doCument

Drafting Stage Budget proposalApproval stage Enacted BudgetExecution Statutory reports

Audit OAG ReportsEASy ISN’T IT!

At this stage Citizens participate in shaping the National Budget

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The 2019 Budget is the first step towards implementing the Transitional Stabilisation Programme (TSP) (Oct 2018 – Dec 2020) whose main objective is to restore economic stability, which is critical for the attainment of the country’s Vision.

The primary objective of the 2019 Budget is to ensure fiscal consolidation which relates to matching of government expenditures to revenues with a view to reduce fiscal deficits and accumulation of debt.

It focuses on projects and programmes with immediate benefits of creating jobs and improving public service delivery. Priorities are in healthcare, education, water and sanitation.

To improve confidence by removing price distortions and strengthening anti-corruption institutions.

The 2019 Budget further seeks to close the exports and imports gap through promoting exports and restricting unproductive imports.

GOvErNmENT OBjECTIvES AND ECONOmIC OUTLOOk

5000.0

4500.0

4000.0

3500.0

3000.0

2500.0

2000.0

1500.0

1000.0

500.0

0.02017 2018 2019 2020 2021 2022 2023 2024 2025 2026 2027 2028 2029 2030

PEr CAPITA INCOME

viSion 2030to become an upper middle

income country

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mACrOECONOmIC fOrECASTS AND ASSUmpTIONS

22.4

7.9

7.77.5

3.14.0

8.3

0.9

4.7

0.8

9.4

1.82.4

GDP GrOWTh AND INFlATION

-0.24

-2.4 -1.6

2014 2015 2016 2017 2018 2019 PrJ 2020 PrJ 2021 PrJ

real GDP Growth (%) Inflation (Anual Average) %

• Prices of goods and services in 2019 are expected to remain relatively high than observed in 2018

• Prices will, however, stabilise in 2020 and beyond

• 2019 total revenues projected at uS$6.6 billion

• tax revenue uS$6.04 billion;

• non-tax revenues uS$162 million;

• retentions uS$400 million;

• 2019 total expenditures projected at uS$8.16 billion

• employment Costs uS$4.05 billion

• Capex uS$2.02 billion (6.4% gdP)

• Budgetdeficit:US$1.57billion(5% of gdP)

• growth to be driven by mining(7.5%), distribution, Hotels and restaurants at(5%), transport and Communication(4%) and agriculture (3%)

• this growth takes into account the impact of unfavourable weather on agriculture and negative impact that may come through stabilizing government finances

• 2019 Projected growth 3.1%

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SOUrCES Of GOvErNmENT rEvENUETO

TAl

rEVE

NU

ES

TAX

rEVE

NU

ES

DIRE

CT T

AX

PAYE

Corp

orat

ePr

oper

tySe

inor

age

Borr

owin

gs

& Do

natio

nsFi

nes &

pe

nalti

esSO

E Su

rplu

sFe

es &

lic

ence

s

Carb

on

Roya

lties

Exci

seCu

stom

s

Capi

ta

Gain

s

INDI

RECT

TAX

NO

N T

AX r

EVEN

UES

VAT

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WHErE WILL THE mONEy COmE frOm?

pAyE $971m

ExCISE DUTy$943.8m

vAT$1.697B

OTHEr DIrECT TAxES$294.7m

OTHEr INDIrECTTAxES$862.2m

COrpOrATETAx $783.8m

CUSTOmS DUTy$484.7m

NON TAx rEvENUE$162m

SOCIAL SECUrITy CONTrIBUTIONSDONATIONS

2019 BUDGET$6.598B

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rEvENUE OUTTUrN DEvELOpmENTS AND OUTLOOk

9000

8000

7000

6000

5000

4000

3000

2000

1000

0

2009

2009

2010

2010

2011

2011

2012

2012

2013

2013

2014

2014

2015

2015

2016

2016

2017

2017

2018 Est.

2018 Est.

2019

Proj

.

2019 Est.

2020

Proj

.

2020 Est.

2021

Proj

.

VAT P.A.Y.E Corporate Tax Customs Duty

Execise Duty Other Taxes Non-Tax Revenue

PrOFIlE OF BUDGET rEVENUES

100%

90%

80%

70%

60%

50%

40%

30%

20%

10%

0%

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rEvENUE HEADS CONTrIBUTION TO THE 2019 BUDGET

non

-tax

rev

enue

2%

othe

r dire

ctta

xes 5

%

Corporate income

13%

other income taxes 14%

Customs duty 15%

excise duties 15%

Personal tax 16%

vat 20%

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2009

2010

2011

2012

2013

2014

2015

2016

2017

2018 Es

t

2019 Es

t

2020 Es

t

100%90%80%70%60%50%40%30%20%10%

0%

VAT P.A.Y.E Corporate Tax Customs Duty

Excise Duty Other Taxes Non-Tax Revenue

6000

5500

5000

4500

4000

3500

3000

2500

2000

1500

1000

500

0

2009

2010

2011

2012

2013

2014

2015

2016

2017

2017

budg

et

2018 Es

t20

19 Est

2020 Es

t

rEVENUE OUTTUrN DEVElOPMENTS & OUTlOOk {EXCl.GrANTS & rETAINED rEVENUES}

PrOFIlE OF BUDGET rEVENUES

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WHAT IS THE TOTAL ESTImATE BUDGET fOr 2019?

vOTE ApprOprIATIONS (excluding retentions)

$6.49 BILLION

CONSTITUTIONAL AND STATUTOry ApprOprIATIONS$1.27 BILLION

DEBT rEpAymENTS$2.55 BILLION

2019 TOTAL ESTImATED ExpENDITUrE$10.3 BILLION

Note: Retentions $400 Million

+

+

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HOW WILL THE mONEy BE SpENT

Primary and Secondary Education

lands & Agriculture, Water, Climate & Rural Resettlement

Health and Child

Care

hom

e Aff

airs

& C

ultu

ral

Her

itage

Defe

nce

and

War

Ve

tera

ns

Transport

And

Infratra

cture

Development

Higher and Tertiary

Education

Commissions

Finance and Economic

Development

Office of the President

local Gvt, Public Works &

National Housing

Justice and legal

AffairsParliam

ent of Zimbabwe

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1 Auditor General 7,763,000 2 ICT 19,542,0003 Mines & Mining Development 22,292,0004 Enviroment, Tourism & Hospitality Industry 38,398,0005 Information Publicity & Broadcasting 45,192,0006 Industry and Commerce 47,299,000 7 Woman Affairs, Community, SME Development 51,044,0008 Foreign Affairs & International Trade 56,090,0009 Youth, Sport, Arts and Recreation 56,663,00010 Public Service, labour & Social Welfare 81,385,00011 Energy & Power Development 85,262,00012 Parliament of Zimbabwe 101,013,00013 Justice, legal & Parliamentary Affairs 158,191,00014 local Government, Public Works & National housing 190,038,00015 Office of the President 294,700,00016 Finance and Economic Development 318,988,00017 Commissions 390,150,00018 Higher and Tertiary Education 424,580,00019 Transport & Infrastructure Development 437,159,00020 Defence and War Veterans 546,939,00021 home Affairs & Cultural heritage 553,161,00022 Health and Child Care 755,837,000 23 lands & Agriculture, Water, Climate & rural resettlement 1,020,552,000 24 Primary and Secondary Education 1,162,681,000

grand totaL 6,864,919,000

2019 BUDGET AllOCATIONS (rANk)

figures are in descending order

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Environment, Tourism & Hospitality

$38.1m

US$10.3 B

2019 TOTAL ESTImATED ExpENDITUrE

Women Affairs and SMEs $44.8m

Mines and Mining Development

$15.4 m

Finance and Economic

Development $272m

Lands, Agriculture,

Water, Climate

and Rural Resettlement

$81.2m

Justice, Legal and

Parliamentary Affairs

$155.6m

Primary and Secondary

Education $1.132bTHE, Science and

Technology Development

$380.8mYouth, Sport, Arts

and Recreation $53.5m

Energy and Power Development $16m

Transport and Infrastructure

Development $399.2mICT and Cyber Security

$17.9m

Parliament of Zimbabwe $145m

Office of the President and Cabinet $194.7m

Auditor General $7.8mForeign Affairs and International Trade

$56.1mInformation and

Broadcasting Services $45.2m

Public Service, Labour and Social Welfare

$81.2m

Defence and War Veterans $546.9m

Home Affairs and Cultural Heritage $517.8m

Industry and Commerce

$47.6m

Debt Service $351m

Local Government, Public Works and National Housing

$179.9m

Commissions $390.2m

Health and Child Care $694.5m

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2019

VO

TE A

PPrO

PrIA

TIO

NS

PEr

EXPE

NDI

TUrE

hEA

D

100% 90

%

80%

70%

60%

50%

40%

30%

20%

30%

20%

10% 0%

Primary and Secondary Educatio

n

lands, Agric

ulture, W

ater, Clim

ate

Health and Child

Care

Defence and War V

eterans

home Affairs and Cultu

ral herit

age

Transport a

nd Infra

structure

Higher & Terti

ary Education, S

cience

Public Service labour a

nd Social Services

Finance and Economic Development

Office of the Presid

ent and Cabinet

local Govern

ment, Public

Works a

nd National h

ousing

Justice , l

egal & Parlia

mentary Affairs

Parliament o

f Zim

babwe

Foreign Affairs and In

ternatio

nal Trade


Youth, S

port, Arts

and Recreation

Informatio

n, Public

ity and Broadcasti

ng

Women Affairs, C

ommunity and SMEs

Informatio

n Communication Technology

Mines and M

ining development

Energy and Power Development

Audit Office

Public Service Commisi

on

Judicial Services C

ommision

Zimbabwe Electri

c Commision

Zimbabwe land Commisi

on

National P

rosecutin

g Authority

Zimababwe Anti -

Corruptio

n Commision

National P

eace and reconciliatio

n

Zimababwe G

ender Commisi

ons

Zimababwe M

edia Commisions

Human Rights Commisi

on

Council of C

hefs

Environment, T

ourism and Hosp

itality

Industr

y

Empl

oym

ent c

osts

Ope

ratio

nal a

nd M

aint

anan

ce C

osts

Capi

tal E

xpen

ditu

re

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EmpLOymENT COSTS CrOWDING OUT SOCIAL SErvICE ExpENDITUrE & INfrASTrUCTUrAL DEvELOpmENT

PrOPOrTION OF EXPENDITUrE BY CATEGOrY 2017-2021

8.2BN

2017 2018 2019 2020 2021

60%

50%

40%

30%

20%

10%

0%

Employment costs

Interest

Capital Expenditure and net lending

Provincial Councils and local Authorities

Use of goods and services

53%

27%

47%

38%

52%50%

52%

26%26% 28%

SALArIES$4.1 BILLION

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2019 VOTE APPrOPrIATIONS: TOP 13

BOTTOM 21

Primary and Secondary Educatio

n

lands, Agric

ulture, W

ater, Clim

ate

Health and Child

Care

Defence and War V

eterans

home Affairs and Cultu

ral herit

age

Transport a

nd Infra

structure

Higher & Terti

ary Education, S

cience

Public Service Commiss

ion

Finance and Economic Development

Office of the Presid

ent and Cabinet

local goverm

ent, Public

Works

Justice legal &

Parliamentary Affairs

Parliament o

f Zim

babwe

1_2E+09

1E+09

800 million

600 million

400 million

200million

0

Employment costs

Operational Costs

Capital Expenditure

900 million

800 million

700 million

600 million

500 million

400 million

300 million

200million

100 million

0

Public Service Commisi

on

Judicial Services C

ommisions

Zimbabwe Electoral

Zimbabwe land Commisi

on

National P

rosecutin

g Authority

Zimababwe Anti -

Corruptio

n

Audit Office

National P

eace and reconciliatio

n

Zimababwe G

ender Commisi

on

Zimababwe M

edia Commisions

Human Rights Commisi

on

Council Of C

hefs

Foreign Affairs


Youth, Sport,

Arts and Recreatio

n

Informatio

n Publicity

Women Affairs, C

ommunity

Informatio

n Communication

Mines and M

ining development

Energy and Power Development

Environment T

ourism

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ACTUAL ExpENDITUrE 2017 -2018, prOjECTED ExpENDITUrE 2019-2021

2019 BUDGET FINANCING GAP

When expenditure exceeds revenues, the gap is financed through borrowing and this has led to the growth in national debt.

Revenue $6.598b Expenditure

$8.16b

The 2019 Budget will need to mobilise funds to meet the following due payments:

• US$2.5 billion Central Bank loan;• US$2.2 billion of maturing treasury bills; and

US$200 million external debt

2021

2020

2019

2018

2017

9262.2

8428.5

7765.3

8161.4

0 1000 2000 3000 4000 5000 6000 7000 8000 9000 10000

6390

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EvOLUTION Of THE prOpOrTION Of NATIONAL DEBT 2009-2018

aPProPriate aCtion needS to Be taKen to ControL our deBt

Domestic DebtExternal Debt

2009 2010 2011 2012 2013 2014 2015 2016 2017 2018

5270 5320 56136847

6161

67047030

7187

7508

7508

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DOmESTIC DEBT COmpOSITION: DEC 2018

our nationaL deBt iS getting WorriSome

rBZ

Capi

talis

atio

n 3%

arre

ars 4

%rBZ (

not is

sued

with

tBs)

5%

rBZ debt takeover(tBs) 14%

gvt debt 14%

Capitalisation 15%

Budget Financing 45%

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NEW MEASUrESSummary of the main budget initiatives; estimates of their fiscal effect and impacts on key policy groups; contributions to meeting the government’s stated policy objectives.

kEY FISCAl POlICY OBJECTIVEFiscal Consolidation that is matching government expenditures to revenues with a view to reduce fiscal deficits and accumulation of debt stock.

rEVENUE MOBIlIZATION MEASUrES

EXPENDITUrE rATIONAlIZATION MEASUrES

• Private vehicles import duty to be paid in forex• Increase in excise duty on cigarettes• Increase of 7 cents excise duty on diesel and 6.5 cents on paraffin• road fines for recurring errand drivers to be increased from about $30 to $700• Taxing satellite broadcasting services• Companies collecting VAT in forex to remit the same in forex

• Civil servants Bonus to be paid on basic salaries only• Discontinue quasi fiscal operations• Reduction of foreign missions/embassies• Biometric registrations for all civil servants from to flush out ghost workers• 5% salary cut for government senior officers right up to presidium• Strengthening of the PFM system• Increase of 7 cents excise duty on diesel and 6.5 cents on paraffin• 2,917 youth officers to be retired by year-end• Public Service rationalization

DEBT MANAGEMENT

• Treasury bill issuances only for budget deficit financing;• Eliminate overdraft with the Central bank save for 5% meant for smoothening cash flow

management;• No further acquisitions of NPls by ZAMCO

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FOOD SECUrITY

SOCIAl PrOTECTION

IMPrOVING ACCOUNTABIlITY AND TrANSPArENCY

ImprOvING SErvICE DELIvEry

• Direct budget support for 1 million vulnerable households under agriculture• rehabilitation of 24 irrigation schemes• Targeting 9 031 hectares under the National Accelerated Irrigation rehabilitation & development

programme in 56 districts• rehabilitation of 50 dip tanks in each province• Fencing of national parks to prevent transboundary diseases.(Foot and mouth, nagana, and

others)• Establishment of Agricultural Commodity Exchange Market• Elimination of multiple farm ownership through land audit

• Allocated resources to Provincial Councils in line with the devolution principle• Completely roll out of PBB to the remaining 23 Votes• Include all fiscal anchors in the PFM Act

• BEAM- payment of school fees to vulnerable children• Harmonised cash transfer• Sustainable livelihoods• Drought mitigation• Health assistance• Support to disabled persons• Children in difficult circumstances• Support to elderly persons

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NEW TAX MEASUrES

ENErGY & POWEr

• Increase tax free threshold from US$300 to US$350. Amount above US$20 000 attracts 45% rate• Widen tax band from US$351 to US$20 000 above which • Provide further relief from the 2% money transfer tax • Reduce tax on raw platinum• Exempt export tax on raw hides• Suspension of duty and exemption from VAT on sanitary ware; this will see a reduction in price

of sanitary ware• Suspension of duty on goods for the physically challenged• Duty free importation of vehicles for senior public servants under the loan scheme• Exempt medical statutory bodies from the requirement to charge and remit VAT• Exempt non-residents from paying 10% withholding tax

• hwange 7 and 8 Thermal Power Station Expansion (US$350 million)• Upgrading of hwange life Extension, Deka Pump Station, Bulawayo and harare Thermal Power

Stations

TrANSPOrT

• Dualisation of 135 km of all roads in Zimbabwe• Upgrading of 646 km of gravel to bituminous surfacing• Gravelling of 483 km• Construction of 22 bridges countrywide• Upgrading of National Parks roads• harare-Masvingo-Beitbridge road Upgrading Project (US$250 million)• NrZ recapitalisation (US$216 million) • r. G Mugabe International Airport (US$78.2 million)

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WATER & SANITATION

EDUCATION

PUBlIC hEAlTh

• Construction of dams-Marovanyati, Causeway, Gwayi-Shangani, kunzvi, Chivhu, Tuli Manyange, Dande, Silverstroom and Bindura dams

• Water and sewer infrastructure rehabilitation in 18 rural District Councils and 18 Urban local Authorities

• Provision of teaching and learning materials for infant, junior and secondary school learners• Continued phasing of the updated curriculum• learner Welfare Support• home Grown School Feeding Programme• Procurement of learner assistive devices for learners with special needs• Teacher in service training• Support to tertiary students with tuition fees, accommodation and educational materials • Infrastructure development to increase access to basic and higher education

Communicable Diseases : Emergency preparedness & response; hIV/AIDS/STD/TB; National Malaria ControlNon Communicable Diseases : Cancer Advocacy; Mental healthFamily health : Nutrition reproductive health

Primary Health Care and Hospital Care: Expanded programme on Immunisation; Integrated management of childhood illnesses Vaccines; Maternal and child health care; results based Financing Support to the various levels of care; rural health Centre and Community Care; District and General hospitals; Provincial hospitals; Central Hospitals and Services

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A GOvErNmENT BUDGET is a yearly financial plan presenting the sources of money and spending for a financial year. It is approved by the parliamentarians and is presented by the Minister of Finance to the nation.“

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issued by:Parliamentary Budget OfficeCnr kwame Nkrumah/Third StreetHARARE

+263 242 700181-8+263 775 807404

Email: [email protected]

Documents

CitiZenS Budget: a CitiZenS guide to tHe 2019 nationaL Budget