Harare – As Zimbabwe prepares to kick-start preparatory consultations for the 2014 national budget, the economy appeared to sink deeper into trouble, with the state revenue collector, the Zimbabwe Revenue Authority (ZIMRA) saying on Thursday that the country had missed on its third quarter revenue collection targets.
ZIMRA chairman, Sternford Moyo said on Thursday that the economy had continued to struggle during the quarter to end September, which was characterised by subdued business activity blamed on apprehension over the July elections won by Zanu PF and President Robert Mugabe. Revenue collections for the third quarter at $897.3 million missed the quarter’s target of $904.9 million.
Zimbabwe’s economic troubles have been worsened by operational constraints such as power cuts, expensive capital, low capacity
utilisation and investor apprehension owing to an uncertain regulatory framework.
“The economy continued to face challenges such as erratic power supplies, liquidity constraints, depressed industrial capacity
utilisation, among other challenges. The marginal negative variance (in revenue collections for the period under review) was due to the harsh economic conditions prevailing in the country and the sluggish economic performance during the run-upto the harmonised elections,” Moyo said.
Zimbabwe conducted presidential and general elections on July 31, with President Robert Mugabe and Zanu PF emerging victorious. However, there are concerns over the economic policies that the new government is likely to push through although some investors are maintaining a long term view of Zimbabwe.
Despite improving sentiment on the Zimbabwe Stock Exchange (ZSE) as shown by the recent bull-run of over 14 days, there are worries among investors and economists that the economy is slowing down. The failure to meet revenue collection targets by ZIMRA has further worsened perception that the economy is struggling.
Mining royalties, one of Zimbabwe’s top revenue earners, missed targets by as much as 39%. Revenue from mineral royalties during the third quarter period amounted to $39.0 million against a target of $63.7 million.
“Mining royalties were negatively affected by fluctuations in international prices of minerals. In addition, royalties from diamonds were negatively affected by the placing of some diamond mining companies under sanctions,” said Moyo.
He said ZIMRA collected a total of $91.8 million in customs duty revenue against a target of $94.1 million. Revenue from customs duty missed targets because of the capital nature of goods imported into the country during the period under review.
Revenue of $102.4 million in company tax collections was 3% below target while Value Added Tax (VAT) collections were offset by the decline of industrial capacity utilisation from about 44% in 2012 to 39% this year, according to the Confederation of Zimbabwe Industries (CZI). ZIMRA collected VAT worth $284 million, resulting in a negative variance of 2%.