Government overspends by US$2.8 billion in 2018: Treasury boss

Harare – Finance and Economic Development Minister, Prof Mthuli Ncube says Government will overspend by $2.8 billion in 2018.

Speaking during his maiden 2019 budget statement presentation in Parliament on Thursday, Ncube said while revenue collections for the first nine months of the year amounted to US$3.8 billion, against a target of US$3.4 billion by year end, collections of US$5.3 billion were anticipated.

“While revenues exceeded budget targets, total expenditures for January to September 2018, overshoot to reach US$6.5 billion against a target of US$4.1 billion.

“Taking into account the expenditure developments to September, outturn to year end is estimated at US$8.2 billion, against a budget of US$5.3 billion, implying an expenditure overrun of US$2.8 billion,” he said.

As a result, the cumulative budget deficit for the period January to September 2018 stands at US$2.7 billion and is projected to remain within that range by year end.

Prof Ncube said the huge deficit is on account of unbudgeted expenditures relating to employment costs, support to agriculture, as well as development capital expenditure and net lending, primarily to public enterprises.

“Financing of the deficit was through Treasury Bill Issuances of which those done through the Bank amounted to US$1.27 billion while Nonbank amounted to US$844.3 million.

“Furthermore, lending to government by central bank, through the overdraft window, increased by US$1.11 billion for the period January to September 2018,” Ncube said.

He said domestic debt stock stood at US$9.6 billion as at end of September 2018 adding that the bulk of domestic debt was necessitated through the issuance of Treasury bills for recapitalisation of public enterprises, settling government obligations as well as the Reserve Bank of Zimbabwe (RBZ) debt assumption.

This debt, Ncube said was also driven by significant increase in government overdraft at the RBZ, from US$1.4 billion in December 2017 to US$2.5 billion by September 2018.

As a result, the issuance of Treasury bills shall be subject to strict approval and will only be issued when it is extremely necessary.

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