HARARE Zimbabwes cash-strapped government is operating on a shoe-string budget of about US$50 million a month or less than 70 percent of what it requires to run government ministries and meet civil servant salaries, the Zimbabwean o Sunday learnt last week.Authoritative sources in the Ministry of Finance said the Treasurer was raking in just over US$50 million a month from taxes. The government needs US$70-US$100 million per month to meet civil servant salaries and finance other activities, a Treasury source told the Zimbabwean on Sunday.
The government is said to be considering presenting a mid-term budget review in July under which Finance Minister Tendai Biti will unveil additional revenue measures to bridge an anticipated funding gap. It is estimated that the government would miss its revenue target of US$1 billion while the expenditure estimate would have to factor in
about US$80 million in overhead expenses for parastatals as well as up to a projected US$300 million increase in humanitarian assistance this year.
This would translate to a financing gap of at least US$200 million, necessitating a revisit of the 2009 budget estimates. As a contingency plan in case of a shortfall in revenue, the authorities are said to be considering measures to raise additional revenue in July 2009 including increasing royalties on mineral resources and broadening the VAT and customs tax bases to ensure the provision of critical public services such as food relief, education and health.
The proposed measures could see a substantial hike in taxes and the inclusion of goods and services until now exempted from tax and import duty. Zimbabwe has adopted a cash budgeting system under which government expenditure should match its revenue in a move meant to ensure ministries spend within their means.
In this regard, the Harare authorities have stepped up the collection of customs and excise duties as well as value-added tax which are expected to account for 60 percent of budget revenue. The government is under intense pressure to increase public sector
wages, cognisant that maintaining the current flat civil service allowance of US$ 100 per month would weaken civil service morale.