Finance and Economic Development Minister, Mthuli Ncube, Thursday presented a ZWL$426, 1 billion 2021 national budget in Parliament projecting an ambitious economic growth of 7, 4 percent next year from a contraction of about 10 percent in 2020.
Zimbabwe’s ailing economy has been dealt a heavy blow by the Covid-19 pandemic just like many across the globe.
“Total bids submitted to Treasury by various line ministries and departments are much higher than the capacity of revenues and borrowings,” said Ncube while presenting the budget.
“Therefore, given the macro-fiscal stabilisation objectives of the budget and the National Development Strategy 1, adhering to an expenditure ceiling of ZWL$421.6 billion becomes imperative.”
Despite economic contraction in 2020, Ncube remains optimistic of a turnaround next year.
“Therefore, economic growth is expected to rebound in 2021 from the consecutive two-year slump to record 7.4%,” said the Finance Minister.
“From supply side, this growth will be driven by strong recovery in agriculture, mining, electricity, construction, transport and communication as well as finance and insurance.”
Some of the prioritised sectors in the 2021 fiscal policy include the primary and secondary education which has been allocated ZWL$55 billion, agriculture (ZWL$46, 3 billion), health care (ZWL$54, 7 billion) and transport and infrastructure development (ZWL$30 billion).
On tax relief measures Ncube reviewed upwards the tax-free threshold.
“Mr Speaker Sir, Government remains committed to improving workers’ disposable income as part of the broader agenda to increase aggregate demand and savings,” said Ncube.
“The recent salary and wage adjustments for public and some private sector employees necessitates a corresponding review in the personal income tax framework. I, therefore, propose to review the Tax-Free Threshold from ZWL$5 000 per month to ZWL$10 000 per month. I, further, propose to adjust the tax bands to begin at ZWL$10 001 and end at ZWL$250 000 per month, above which the Highest Marginal Tax rate of 40% will apply.
He added: “The above measures are effective from 1 January 2021. In addition, I propose to review upwards, the bonus Tax-Free Threshold from ZWL$5 000 to ZWL$25 000, with effect from 1 November 2020.”