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Sunday, April 18, 2021

2021National Budget, Assumptions, Highlights and Provisions

The 2021 National Budget Statement titled ‘Building resilience and sustainable economic recovery’ heralds the second leg of the Government of Zimbabwe’s ‘reform and development Agenda’ aimed at achieving Vision 2030 of Zimbabwe becoming ‘a middle-income country by 2030.’

Underpinning the Budget is the National Development Strategy 1 (NDS1), running from 2021 to 2025. NDS1 seeks to ‘consolidate and advance stabilisation and supply strides made under the TSP and further give the economy momentum for faster growth, with capability to create jobs, increase economic resilience and create a more competitive economy.’

Stakeholder expectations raised during budget consultative processes ranged from calls for stimulus packages to buttress growth and aggregate demand as well as increased public service allocation to fund improved social safety nets and social protection, water and sanitation, employment creation. Emerging consensus placed emphasis on the needs for sound macro-economic stances to instill confidence, certainty and stability in the economy, just measures to quell civil service unrest around a living wage and stringent measures to stem corruption and contain the pressing debt problem. The Zimbabwe Coalition on Debt and Development (ZIMCODD) in its People Led Campaign urged a public sector led recovery to create jobs, strengthen public service delivery in response to Covid 19, provide economic stimulus to the informal sector and free Zimbabwe from debt bondage. 

Government’s positive assessment of the successes of the Transitional Stabilisation Programme is used to justify the private sector led growth trajectory and the imposition of policies of austerity, deregulation and privatisation. However, the reality of recession, institutional decay and stalled human development challenges this assertion.

Key assumptions underpinning the 2021 National Budget

The 2021 National Budget is anchored on the following assumptions:

  • Recovery from Covid-19 pandemic;
  • Resumption of global economic activity;
  • Good agricultural season;
  • Enhanced revenue collection;
  • Sustainability of the auction system;
  • Tourism and trade resumption;
  • Materialization of mining investment targets;
  • Firming international mineral prices;
  • Recovery in domestic aggregate demand;
  • Macro stability (currency stability, declining annual inflation and fiscal stability);
  • Domestication of value chains;
  • Further control of wasteful expenditures and value of money on all expenditures.

Ministry budget allocations

The total 2021 budget is pegged at ZWL 426.1 billion. Budget allocations for selected ministries are presented hereunder.

MinistryAllocation (ZWL billion)
Primary & secondary education55.221
Health and Child Welfare54.705
Lands, Agriculture, Water, Climate and Rural Resettlement46.259
Transport and Infrastructural Development30.064
Defence and War Veterans23.754
Higher & Tertiary Education, Science and Technology Development14.368
Youth, Sport, Arts and Recreation3.447
Industry and Commerce2.345
Women Affairs, Community, Small and Medium Enterprises Development2.157
Energy and Power Development1.641
Mines & Mining Development1.399
Zimbabwe Anti-Corruption Commission0.317

Major National Budget highlights and provisions

The 2021 National Budget prioritizes inclusive growth and macro-stability, developing and supporting productive value chains, optimizing value in natural resources, infrastructure, ICT and digital economy, social protection, human capital development and well-being, effective institution building and governance as well as engagement and re-engagement.

The Government is targeting an economic growth rate of record a 7.4% growth in 2021 leading to the recovery of 150 000 formal jobs lost during the lockdown of 2020.

Associated monetary policy measures seek to ascertain exchange rate and price stability by engendering a stable financial sector, tight money supply management and stability of the foreign exchange rate.

The fiscal policy targets a budget deficit of -1.3% of GDP (an NDS1 guideline) through:

  • Adhering to budget stipulations on expenditure;
  • Borrowing only for expenditures defined by the budget;
  • Making use of Open Market Operations (OMOs) in borrowing;
  • Discontinuing recourse on RBZ loans;
  • Steady reduction of the wage bill;
  • Constant review of public service positions and benefits
  • Observe new public procurement provisions
  • Limit subsidies to budgeted and deserving cases
  • Advancing tax systems

Public pension scheme reform (adopt a funded pension scheme

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