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HARARE – Zimbabwe’s budget deficit is expected to be 1.3% of gross domestic product in 2024, Finance Minister Mthuli Ncube said on Thursday, but warned that concerns remained about the fiscal impact of the drought.
The Treasury earlier this month forecast economic growth of 2% in 2024, down from a November forecast of 3.5%, as southern Africa endures its worst drought in decades.
Ncube told lawmakers at the mid-term budget review that agricultural sector output was expected to shrink by 21.2% due to the drought, compared with a 4.9% contraction in November.
Ncube added that spending priorities for the rest of the year were likely to change as the government assessed the impact of the drought on food security and water resources.
In April this year, the southern African country launched its new gold-backed currency, the Zimbabwe Gold (ZiG), its sixth attempt to issue a national currency in 15 years.
“Since the launch of the ZiG currency, the economy has been experiencing relatively stable prices and exchange rates,” Ncube said, adding that inflation has remained stable in the two months since its launch.
However, Zimbabweans have been slow to accept the new currency, choosing instead to continue using foreign currencies, mainly the U.S. dollar, for transactions.
Ncube presented revised tax proposals that he said would encourage greater use of the currency, including changes to corporate taxes and making some domestic taxes payable only in local currency.
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