Zimbabwe will not require a supplementary budget to cover grain imports occasioned by the El Nino-induced drought, but will instead reallocate resources and utilise additional income from new taxes to fund the food imports, Professor Mthuli Ncube, Minister of Finance, Economic Development and Investment Promotion said.
Prof Ncube acknowledged the strain the drought would put on
the fiscus and the economy saying the Government would focus on maximising
existing resources and generating more revenue through taxes.
Devastated by low rainfall that wiped out most of the maize
crop, Zimbabwe declared a national disaster to enhance food security. The
country urgently needs US$2 billion in aid to avert food shortages.
Neighbouring Zambia and Malawi have also recently declared
states of disaster due to the drought.
“We will do a budget reallocation, for example, certain
programmes may have to be slowed down to accommodate the importation of grain.
I don’t think there will be any need for a supplementary budget as such,” said
Prof Ncube in an interview with Bloomberg news channel last Thursday. In the
last budget, Zimbabwe introduced new taxes, such as a sugar content tax on
beverages and an extension of VAT (Value Added Tax) to certain basic
commodities. Minister Ncube said the measures aimed to raise additional revenue.
“(Of) the…taxes that we introduced…we believe will add some
additional income so there may not be need to really go back and seek
permission from Parliament to do an extra budget but we will just re-allocate
from what we have received and work with a tax regime that we have in place,”
said Minister Ncube.
The impact of the El NiƱo drought on Zimbabwe’s GDP is
still unclear. Professor Ncube stated that another assessment would be
conducted soon to determine if the projected 3,5 percent economic growth needs
to be maintained or revised.
“The downward risk is a lot higher now than before, our
focus is 3,5 percent and we will do a further assessment in two months and see
whether we need to revise that or keep it where it is,” said Minister Ncube.
The worst drought in living memory struck Zimbabwe in 1992,
leading to the deaths of a quarter of the national cattle herd. The drought has
even impacted drought-resistant crops like cotton, which typically thrive with
minimal rainfall.
According to the World Meteorological Organisation, El Nino
phenomena occur on average every two to seven years in episodes lasting nine to
12 months.
It is a naturally occurring climate pattern linked to the
warming of the ocean surface temperatures in the central and eastern Pacific
Ocean and takes place in the context of a climate changed by human activities.
Herald
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