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Major highlights of the 2011 national budget
Southern African Parliamentary Support Trust
November 26, 2010
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The 2011 National
Budget was presented in Parliament by the Honourable Tendai Biti,
Minister of Finance, on 25 November 2010. It is important to note
that this is the first budget statement which has benefited from
country-wide consultations by both the Executive and Parliament
through the Budget, Finance and Investment Promotion Portfolio Committee.
We also note that the Minister has considered some of the proposals
that were put forward by the citizens during Public Hearings on
budget proposals, particularly the need to increase civil servants’
salaries as well as increasing tax-free threshold. Below are the
general highlights of the 2011
National Budget highlights
inflation decreased from 0.7% in January 2010 to 0.2% in October
inflation was 3.6% in October 2010 and is expected to end the
year at 4.8% which is way below the SADC average of 7.5%.
- GDP growth
expected to increase to 8.1% in 2010 from 5.7% in 2009 on the
backdrop of a 47% growth in mining and quarrying as well as a
33.9% growth in agriculture.
- The services
sectors have emerged as great contributors to the GDP, particularly
Transport and Communication services whose contribution increased
to15.2% of GDP in 2009 from 8% in 2000.
contributed 15.5% of GDP in 2009, Manufacturing 14.7% while mining
contributed just 4.9% over the same period.
- Maize production
in 2010 increased by 34%, Tobacco by 110% and Cotton by 23%. However
the Strategic Grain Reserves of 220 910 tons as at 19 November
2010 represented 73.6% of the national requirement of 300000 tons.
sector capacity utilization averaged 35.72% by October 2010.
- A total of
US$41.94 million was received by Treasury from the sale of Diamonds
while US$8.03 million has not yet been remitted.
- Out of a
total commitment of US$735 million from Lines of Credit only US$273.6
million has been received.
earnings expected to increase by 25% from US$2 billion in 2009
to US$2.5 billion by 2010.
- The Capital
Account is expected to improve from a deficit of US$556.5 million
in 2009 to a surplus of US$578.5 million in 2010. This is expected
to improve the Balance of Payment deficit from US$1.9 billion
in 2009 to US$462 million in 2010.
debt is now US$6.9 billion which is 103% of GDP.
- Total revenue
collection exceeded the target of US$1 561 million by 15% to US$1
793 billion collected by October 2010.
- VAT contributed
the biggest share to total revenue with 37%, indicating that the
tax system disadvantages the bottom poor 85% of the population.
- Out of a
total of US$810 million expected from VOC only US$360.2 million
was received in 2010.
- Total expenditure
as at end of October 2010 was US$1.46 billion and is expected
to reach US$2 billion by December 2010.
- Current expenditure
continues to consume the bulk of government expenditure at 82%
while the remaining 18% is attributed to capital development expenditure.
Employment costs represented 46.3% of total expenditure.
- Tax free
threshold increased from US$175 to US$225 per month, thus putting
US$600 per annum into the pocket of low wage earner.
- The highest
marginal tax rate maintained at 35% for individuals.
of customs duty on basic commodities maintained up to 30 June
2011 with exception soap.
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