BILL WATCH 58-2015

BILL WATCH 58/2015

[1st December 2015]

Parliament Will Not Sit Again Until Tuesday 15th December

Budget presented and Parliament adjourned  The Minister of Finance and Economic Development presented his 2016 National Budget Statement to a packed National Assembly on Thursday 26th November.  President Mugabe was in attendance.   His address was a two-hour, 300-paragraph abridgement of the full printed version of the Budget Statement tabled by the Minister [see more below].  After the address both Houses adjourned until Tuesday 15th December – allowing time for the Budget Statement and accompanying Estimates of Expenditure for 2016 to be digested by MPs, Portfolio Committees and the public before the National Assembly considers them in plenary session.

Also covered in the Minister’s address was the need for Supplementary Estimates of Expenditure for the current 2015 financial year.  These were tabled. 

In this bulletin we outline features of, first, the Supplementary Estimates, and, next, the Budget and Estimates for 2016.  

[Budget documents available from Veritas are listed at the end of this bulletin.]

Supplementary Estimates for 2015 Financial Year

These Supplementary Estimates cater for situations where, to quote the document itself, “the original estimate has proved inadequate” and unbudgeted expenditure was unavoidably incurred.  Examples given in the Budget Statement are: crop inputs support; employment costs; procurement of grain; Tokwe Mukosi dam; arrears on utility bills for services rendered to Ministries and departments; and an unusual number of by-elections.

Large amounts allotted include: Finance and Economic Development [$84 million]; Agriculture Mechanisation and Irrigation Development [$52 million]; Environment, Water and Climate [$55 million]; and Primary and Secondary Education [$18 million].  The total additional amount to be voted is just over $252 million, which will require the passing of the Appropriation (Supplementary) Bill. 

Financing  These additional expenditures will be financed by cutbacks elsewhere, so overall actual expenditure for 2015 is expected to still be within the Revised Revenue outturn of $3.5 billion [Budget Statement, paragraphs 1031 to 1053]. 

The 2016 Budget and Estimates

Budget Theme

The Budget theme is Building a Conducive Environment that attracts Foreign Direct Investment.  In support of this theme, the Minister announced measures to attract FDI, including—

ease of doing business reforms with a target completion date of March 2016

transformation of ZIA [Zimbabwe Investment Authority] into a true one-stop investment shop

gazetting before Christmas, by the Minister of Youth, Indigenisation and Economic Empowerment  of “the frameworks, templates and procedures for implementing the indigenisation policies in a manner that both promotes investment and eliminates discretionary application of the law

on BIPPAs [bilateral investment promotion and protection agreements] with other countries – implementation of the 54 already signed, completion of those under negotiation – such agreements being likely to increase investor confidence

special economic zones [SEZs]  [the Special Economic Zones Bill was gazetted two days before the Budget presentation] [available from Veritas at the addresses given at the end of this bulletin]

border post efficiency

mobilisation of Diaspora remittances [projected at $960 million for 2015]  under a National Diaspora Policy

Budget framework

Projected total revenues

$3.85 billion 

Projected total expenditure & Net Lending

$4.00 billion

[Total expenditure including loan repayments

$4.34 billion]

Recurrent expenditure

$3.68 billion

Development Budget

$315 million

Employment costs

$3.19 billion

Operations

$384 million

Debt service interest

$110 million

Capital expenditure

$315 million

The Minister announced the Budget figure as $4 billion.  This figure excludes $340 million for loan repayments, which will be handled “off-Budget” as explained by the Minister in the section of the Budget Statement headed Arrears Clearance [paragraphs 30 to 60].  

Key percentages of Total Expenditure of $4 billion

Employment costs

79.8%

Operations

9.6%

Interest

2.7%

Capital expenditure

7.9%

Expenditure

Cons and Stats [see note below]

$600 million

Vote appropriations [see note below]

$3.4 billion

      Total

$4.0 billion

Constitutional and statutory appropriations [“cons and stats”]

These amounts must be paid out of the Consolidated Revenue Fund [CRF] by virtue of appropriations/allocations already made by the Constitution and Acts of Parliament authorising payments from the CRF for specific purposes.  As such they do not have to be approved by Parliament again during the current Budget exercise, but they must be covered by projected revenue or alternative sources.  Examples of these cons and stats are: loan repayments; the salaries and allowances of the President and Vice-Presidents, the Speaker of the House of Assembly and the President of the Senate, the judges and other constitutional appointees such as the Comptroller and Auditor-General; remuneration of traditional leaders; State pensions [including war veterans and ex-political prisoners pensions].  Loan repayments, pensions and pension-related payments account for the bulk of cons and stats.  Amounts listed under this heading include:

Presidents and Vice-Presidents

$624 000

Speaker and Senate President

$240 000

Pensions

$477 600 000

Traditional leaders

$8 000 000

Vote appropriations [total $3.4 billion]

This is the total expenditure Parliament will be expected to approve by passing the Appropriation (2016) Bill.  It includes the following amounts for Ministries and other bodies [figures to nearest million]:

Office of President and Cabinet

$180 million

Parliament

$20 million

Finance

$215 million

Defence [including Army and Air Force]

$358 million

Agriculture

$145 million

Health

$331 million

Primary and Secondary Education

$810 million

Higher and Tertiary Education

$308 million

Home Affairs [including Police]

$397 million

Justice [including Prisons etc. Service]

$122 million

The breakdown of each Vote is shown in the Blue Book in some detail.  For instance, the Office of the President and Cabinet is allocated $17.3 million for foreign travel and $8.7 million for State residences. 

Employments costs for the security services are:

Army

$273 million

Air Force

$34 million

Police

$355 million

Prisons and Correctional Service

$73 million

Financing the deficit

Proposed expenditure of $4 billion will exceed projected revenues by some $150 million.  The Minister said this deficit will be financed largely by borrowing on the domestic market.

Other Information in the Blue Book: Ministry Profiles and Performance

The Blue Book contains other information in addition to the hundreds of pages of figures in columns,.  For instance, each of the 32 Votes making up the Estimates starts with a section headed Profile and OutputsIn this section there are six parts: I. Overview of the Vote [including figures for officers in post and vacancies]; II. Key result areas; III. Major achievements during 2015; IV. Policy priorities 2016-2018; V. Performance Log-frame [goals-outcome-output-performance indicator]; VI. Revenue Retained.  Those wanting to assess what Government Ministries and offices should have done and have done during 2015, and will be or should be doing next year and until 2018, may find this material of use.

Budget Documents Available

The following documents tabled by the Minister are available from Veritas—

the Supplementary Estimates of Expenditure for 2015 [the current financial year] to cover inescapable additional expenditure not budgeted for in the original 2015 Estimates

the Estimates of Expenditure for the year ending 31st December 2016  [the “Blue Book”, 459 pages]

the 2016 National Budget Statement [full version]

the “Departmental Draft” of the Finance Bill [i.e., the Ministry’s draft of a Bill to give effect to changes to taxation laws proposed in the Budget Statement – this draft will be replaced by the final legal draft that will be presented at the end of the Budget debate]

[available in soft copy on the Veritas website www.veritaszim.net or, for those who do not have Internet access, by email from Veritas – please see addresses given at the end of this bulletin.]

Veritas makes every effort to ensure reliable information, but cannot take legal responsibility for information supplied

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