Siphakeme .Mnindwa
Golden Sibanda, Harare Bureau
FINANCE, Economic Development and Investment Promotion Minister, Professor Mthuli Ncube, yesterday delivered a recovery and growth-oriented National Budget Statement, pronouncing several measures to drive faster economic expansion, engender stability and build resilience of the economy while protecting vulnerable groups.
Presenting the Government’s ZiG276 billion 2025 fiscal plan, running under the theme, “Building Resilience for Sustained Economic Transformation,” before President Mnangagwa and legislators at the New Parliament complex in Mt Hampden, Harare, Minister Ncube projected an economic growth of six percent next year.
He said the forecast growth would be driven by the expected strong recovery in agriculture, which is forecast to grow by 12,8 percent on account of improved rains following the poor performance of the strategically key sector in 2023/24 due to the devastating impact of the El Nino-induced drought.
The growth is also expected to emanate from other key sectors of the economy namely mining, electricity generation and information communication technology.
“The anticipated La-Nina weather phenomenon, usually associated with normal to above-normal rainfall, is going to be the major driver of growth in agriculture and electricity generation,” Minister Ncube said.
This comes as the mining sector is expected to grow by 5,6 percent driven by higher gold prices.
Electricity generation is forecast to register a 10,6 percent surge on account of improved rainfall while the ICTs sector is seen expanding by 9,9 percent.
The growth forecasts put Zimbabwe among the fastest-growing economies in the region, only second behind Zambia’s 6,5 forecast growth.
The 2025 economic growth projections are underpinned by several assumptions, including normal to above-normal rainfall, which is expected to result in increased agricultural production, a stable exchange rate, following the introduction of several tight fiscal and monetary policy initiatives as well as low inflation, providing a conducive business environment.
Minister Ncube said economic growth beyond 2025 was projected to remain steady at 5 percent, mainly driven by growth in private consumption and investment.
“The National Budget thrust during 2025 is to consolidate economic transformation and enhance the country’s resilience to shocks.
“The budget seeks to address persistent macroeconomic vulnerabilities, as well as meet the developmental needs of citizens in a constrained fiscal environment.
“The 2025 National Budget will, therefore, focus on enhancing the macroeconomic and business environment, as well as delivery of social services to enhance the human capital base of the country,” Minister Ncube said.
Strategic priority areas will include the establishment of a durable and stable macro-economic environment, underpinned by growing confidence, acceptance and use of the domestic currency, support to productive value chains and diversifying the local product range to sectors such as manufacturing.
The diversification of the country’s product offerings would increase its participation in regional and global markets, upscaling the delivery of sustainable infrastructure projects and public services. Treasury said it will also pursue measures to improve the uptake of ICTs and other emerging technologies.
The 2025 budget also seeks to accelerate gender equality and empowerment of women, fast-track the devolution and decentralisation agenda, create effective public institutions and governance systems, accelerate the arrears clearance and debt resolution process, rebuild trust and foster cooperation with the international community, improve the quality of life and the skills of citizens by increasing access to social services such as health, education and social protection.
Minister Ncube said the fiscal policy thrust of the 2025 National Budget was informed by the overall policy objective of restoring macroeconomic stability, critical for economic development and the achievement of Vision 2030.
To build economic resilience in light of the growing threats of the devastating impact of climate change on agriculture, Treasury has set aside financial resources for dam construction, irrigation development, rural development, contracting farmers and procurement of grain for the strategic grain reserve.
In line with the Zimbabwe National Climate Adaptation Plan, the Government intends to increase support for sector-specific adaptation strategies, improve disaster preparedness and promote the adoption of climate-smart practices in agriculture, water management and infrastructure development, among many other interventions.
In order to drive the performance of businesses, Minister Ncube proposed various measures to support key value chains such as mining, manufacturing and tourism and a coterie of tax relief measures.
To create a level playing field between ready-to-drink beverages and cordials, which have more sugar content, the Minister reviewed the special surtax on beverages’ sugar content on cordials from US$0,001/gramme to US$0,0005/gramme, with effect from 1 January 2025.
In seeking accelerated implementation of an integrated power generation and transmission framework, which incorporates independent power producers to enable them to sell electricity through the national grid, Minister Ncube extended value-added tax deferment to the energy sector effective January 1, 2025.
To incentivise the use of electric vehicles, Minister Ncube extended rebate of duty on equipment used for setting up electric vehicle solar-powered charging stations, imported by approved operators.
In order to reduce the cost of Liquefied Petroleum Gas (LPG), the Minister exempted the product from value added tax with effect from January 1, 2025.
Minister Ncube prescribed mandatory registration for corporate and personal income tax of several operators in the sector, including fabric merchandisers, clothing merchandisers/boutiques, spare parts dealers, car dealers, grocery and kitchenware merchandisers, hardware operators and lodges.
The move is meant to provide an opportunity for the emerging (informal) sector to contribute to the national fiscus.
As part of revenue-enhancing measures, the Treasury chief introduced several taxes including removing the tax holiday for Special Economic Zones (SEZs) for the first five years and replaced the provision with a flat corporate income tax of 15 percent.
Additionally, the Finance Minister imposed a 10 percent withholding tax on the gross winnings of sports betting punters in response to the growing prevalence of the industry in Zimbabwe.
He noted that the consumption of highly processed foods had been identified as one of the factors responsible for the prevalence of obesity and associated non-communicable diseases.
“I propose to introduce a Fast Foods Tax on the value of the following food items sold by Fast Food Retail Outlets and Restaurants at a modest rate of 0,5 percent on the sales value, with effect from 1 January 2025,” Minister Ncube said
Applicable products include pizzas, burgers, hot dogs, shawarma, french fries, chicken, doughnuts and similar products and tacos.
“It is envisaged that the proposed tax will go a long way in encouraging operators to adopt culinary practices that promote healthy eating,” Minister Ncube said.
