TREASURY has projected a US$100 million deficit for the 2013 Budget after revising downwards targeted collections for the year on poor monthly inflows and anticipated poor collections over the remaining two months of the year. Figures from the Ministry of Finance show that projected inflows were marked down from US$3,8 billion to US$3,7 billion while inflows for November and December have also be reviewed downwards from US$870 million to US$702 million.
Addressing a pre-Budget seminar in Victoria Falls last week, Finance and Economic Development Minister Patrick Chinamasa said the downward revision of targeted inflows was in line with the revision in economic growth and declining inflows.
“Interim revenue collections as at October 29, 2013 indicate that revenue underperformed during the month of October. Collections amounted to US$248 million against a target of US$328,8 million for the month,” Minister Chinamasa said.
“Overall, the initial (National) Budget revenue projection of US$3,86 billion for the year has been revised downwards to US$3,762 billion, resulting in a projected revenue shortfall (deficit) of about US$98 million,” the finance minister added.
A total of US$2,790 million was collected during the nine months to September against a target of US$2,714 billion resulting in a positive variance of US$76 million.
While collections exceeded budgeted inflows for the period it should be noted that this was on the back of lump sum payment of mobile phone licence renewal fees. Tax revenue contributed US$2,54 billion or 91 percent of total revenue against a target of US$2,57 billion. This brought a negative variance of US$33,7 million.
Non-tax revenue contributed US$252,4 million or 9 percent of total revenue against a target of US$142,6 million resulting in a positive variance of US$109,8 million. Significant revenue underperformance was experienced on royalties, corporate income tax, value added tax and domestic dividends and interest revenue heads.
The finance ministry said despite the overall cumulative positive revenue performance, monthly revenue collections fluctuated throughout the period under review. The economy has largely been dependent on consumption taxes and individual income tax.
VAT contributed 29 percent, individual tax 20 percent, excise duty 13 percent, customs duty 10 percent, corporate income tax 10 percent, royalties 4 percent, other direct and indirect taxes 5 percent and non-tax revenue 9 percent.
Of the US$2,7 billion collected 63 percent went to employment costs, 22 percent operations, capital expenditure 8,7 percent, loan repayment 5,5 percent and interest 0,8 percent. Expenditure priorities included improving the welfare of public servants, support to national programmes, support to the 2013/14 summer crop and livestock programme.
Reducing stock of domestic payment arrears and non-accumulation of new arrears, servicing external loan obligations, improving the delivery of social services and reducing the infrastructural deficit formed expenditure priorities as well.
“Employment costs continue to account for a disproportionate share of total revenues, averaging 70 percent over the nine-month period to end of September.”
The 2013 Budget may need to consider additional commitments arising out of the adoption of the new Constitution, inescapable funding requirements in support of national programmes, and increased support for agriculture. The need to mobilise additional resources becomes paramount.