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Third Quarter 2010 Treasury Bulletin
Minister of Finance - Government of Zimbabwe
September 30, 2010

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Introduction

The 2010 Third Quarter Bulletin is a first analysis of the Budget performance after the Mid-Term Fiscal Policy Review presentation on the 14th of July 2010. Thus this Bulletin is reflecting on the Budget performance during the months of July- September 2010.

The Mid Term Fiscal Review was meant to revise the 2010 original Macroeconomic and Budget Framework so as to incorporate economic developments during the first half of 2010. The revision of the Macroeconomic Framework was also necessitated by the envisaged underperformance of inflows from donors (Vote of Credit).

However, despite under performance of the Vote of Credit (VOC), the overall budget was maintained at US$2.25 billion with changes only done to rationalise expenditures towards pressure areas.

Below is the revised Macroeconomic and Budget Framework on which the review was based.

The 2010 Mid-Term Revised Macroeconomic and Budget Framework

  2009 Outturn 2010 Orig. Proj. 2010 Rev. Proj.
Real GDP 5.7% 7.0% 5.4%
Annual Average Inflation -7.7% 5.1% 4.5%
Nominal GDP US$5.220 billion US$5.561 billion US$5.517 billion
Revenues US$0.973 billion US$1.440 billion US$1.750 billion
% of GDP 18.6% 26% 31.7%
Total Expenditures US$1.013 billion US$2.250 billion US$2.250 billion
% of GDP 19.4% 40.5% 40.78%
Overall Balance (US$93 million) (US$810 million) (US$500 million)
Vote of Credit (US$93 million) (US$810 million) (US$500 million)
% of GDP 1.8% 14.6% 9.1%
Exports of Goods and Services US$1.591 billion US$2.018 billion US$1.929 billion
% of GDP 30.4% 36.3% 37.5%
Imports of Goods and Services US$3.213 billion US$3.498 billion US$3.635 billion
% of GDP 61.5% 62.9% 65.9%
       

It is also worthy noting that this is the third quarter of the first year of the implementation of the Three Year Macroeconomic Framework (STERP II) which was launched in December 2009. STERP II, a successor of STERP I of 2009 was instituted to consolidate the use of multiple currencies, cash budgeting and liberalisation of the goods and foreign exchange markets.

Revenues continue to perform above the set targets in the third quarter amounting to US$655.7 million against a target of US$549.8 million. Expenditures were also above the set targets due to pressure mainly of recurrent nature. Total expenditures amounted to US$537.8 million against a target of US$385.3 million. Revenues of US$655.7 against expenditures of US$537.8 resulted in a quarterly surplus of US$117.9 million.

On the prices front, inflation continued on the downward trend from the month of June with month-on-month inflation at -0.1% during the first two months of the review period but September recorded a positive inflation rate of 0.1%. Consequently year-on-year inflation declined from 4.1% in July to 3.6% in August before increasing to 4.2% in September 2010.

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