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Performance and projection of the 2011 budget
Tendai Biti, Minister of Finance - Government of Zimbabwe
May 31, 2011

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http://www.zimtreasury.org/budget.cfm

Introduction

The 2011 budget presented and approved by Parliament sought to cover critical infrastructure projects as well as improvement in service delivery. The capital budget estimate stands at about US$551 million representing 20% of the total budget of US$2.746 billion. The budget provision for service delivery amounts to US$1.346 billion with emphasis being given to improvement of service delivery in the health and education sectors as well as social safety nets. Recognition was also given to other sectors including security taking into account their critical role in the economy.

The approved budget provides for US$1.4 billion for employment costs, including the wage bill, as well as pension, medical aid and social security contributions representing 45% or 14.5% of total expenditure and GDP respectively.

Implementation of the 2011 budget remains anchored on the principle of cash budgeting system and capacity to collect revenues projected to be around US$2.746 billion by year-end. The revenue collections achieved on a monthly basis determine the extent of disbursements towards the budgeted items, the first charge being towards employment costs. The monthly bill for employment costs now averages US$120 million in comparison to the average monthly revenue collections of US$229 million.

It is necessary that we review the above budget setting in comparison to the actual performance to date in the context of emerging and pressing 2011 funding requirements.

2011 Budget performance to date

As at May 2011, Budget disbursements stand at US$930 million which is 34% of the budget estimate of US$2,746 billion.

Revenue outturn to end of May 2011 amounted to US$1.023 billion and was below the target for the same period of US$1.145 billion, giving a negative variance of US$177 million.

The Table below gives the Budget outturn to May 2011:

ITEM TARGET ACTUAL VARIANCE
    US$ US$
Revenue 1,145,000,000 1,027,800,000 117,200,000
Expenditure 1,006,137,200 930,100,000 80,437,200
Of which:      
Employment costs 547,310,000 582,600,000 -18,890,000
Ministries operations 159,591,400 142,200,000 17,391,400
Grants & Transfers 64,045,000 67,500,000 -3,455,000
Interest payments 18,000,000 14,300,000 3,700,000
ZIMRA grant 38,195,800 36,600,000 995,800
Capital expenditures 178,995,000 86,900,000 80,695,000

From the above Table, it is self evident that employment costs continue to crowd out other expenditures, particularly development programmes.

What appears to be a positive variance between revenues and expenditures is an accumulation of what Treasury has recourse in to meet employment costs in the subsequent month. Without such a cashflow, payments of salaries in the subsequent month by due dates would be unachievable.

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