Source document: https://docs-lawep.s3.us-east-2.amazonaws.com/1696512460227.pdf (Zimbabwe)
2020 National Budget Highlights The People’s Budget Zimbabwe 1.0 THEME “Gearing for Higher Productivity, Growth and Job Creation” 2.0 BUDGET THRUST Continued Macro-Fiscal Consolidation Growth and Productivity Job Creation Competitiveness Strong, Sustainable and Shared Development 3.0 THE ECONOMY IN 2020 Economic recovery expected in 2020, with projected growth of 3%.
This is premised on the following assumptions:        Expected better rainfall season Increased use of irrigation to sustain agricultural activities; Better planning for agriculture production; Improved electricity supply through imports and other alternative sources of energy e.g solar; Improved macro-economic environment; Fiscal incentives to various sectors of the economy; Improving investments by both public and private sector.
1 2020 National Budget Highlights The People’s Budget Growth by sector GDP Growth + 3.0% Agriculture + 5.0%  Average rainfall season expected  Expanded irrigation programme  Timely provision of inputs Mining + 4.7% Manufacturing + 1.9%  Improved electricity supply  Major investment agreements coming into effect  Reduce mineral leakages  Improved export environment  Improved electricity supply  Resuscitation of Steel Industry  Strengthening of industrial value chains, mineral beneficiation and export led industrialisation Construction + 2.3%  Facilitate access to building permits  Mobilisation of affordable lines of credit Distribution, Hotels and Restaurants  Operationalisation of the Routes Development + 3.3% Committee  Renewal of fiscal incentives 3.1 Current Account The Current Account is the main measure of a country’s trade, and a Current Account deficit means that the country is paying more to the rest of the world than it is receiving.
Following introduction of the local currency, competitiveness has improved and as a result, the country’s Current Account has also improved, from –US$1.4 billion in 2018, to a projected –US$323 in 2019.

In 2020, the current account is poised to further improve on the back of improved export performance and a shift of demand towards locally produced goods.
Payments Receipts US$7.0 bn US$7.0 2018 -US$1.4 bn 2019 -US$323 m 2 2020 -US$57 m 2020 National Budget Highlights The People’s Budget 4.0 2020 MACRO-FISCAL FRAMEWORK National Accounts (Real Sector) Real GDP (ZWL$m) Nominal GDP (ZWL$m) Real GDP Growth (%) Government Accounts Revenues (ZWL$m) % of GDP Expenditures (ZWL$m) % of GDP Recurrent Expenditures (ZWL$m) % of GDP Employment Costs (ZWL$m) % of GDP Capital Expenditure (ZWL$m) % of GDP Overall Balance (ZWL$m) % of GDP 2018 2019 2020 2021 2022 19 845.7 44 331.9 3.4 18 555.2 130 768.5 - -2 366.5 -5.3 21 000.1 16.1 26 188.7 20.0 17 720.7 13.6 7 700.0 5.9 8 468.0 6.5 -5 188.6 -4.0 58 641.0 17.2 63 641.0 18.7 38 851.0 11.4 17 751.4 5.2 24 790.0 7.3 -5 000.0 - Government is aiming for a low deficit of around 1.5% of GDP in 2020, such that little additional lending will be necessary.
Budget Balance Target Revenue Expenditure Recurrent Expenditures Employment Costs Capital Expenditure Overall Balance $58.6 bn $63.6 bn $38.9 bn $17.8 bn $24.8 bn ($5.0 bn) 5.0 2020 FISCAL POLICY THRUST The fiscal policy objective in 2020 is directed at managing spending (a) within the Budget (b) through non-inflationary financing and (c) complemented by a tight monetary policy.

Fiscal Policy  Delivering a sustainable overall Budget balance consistent with SADC thresholds.
(Under tight circumstances, an annual deficit of up to -5% of GDP may be temporarily recorded, while resolving the crisis).

However, in our quest for immediate macro stability, a near balanced budget of 1.5% of GDP from 2020 is targeted.

 Zero tolerance on expenditures outside the Budget and without Parliamentary approvals.

 Observance and enforcement of ‘hard’ Budget constraints through strengthening PFMS.
  A strict prudent approach to ensure expenditures are phased, controlled and directed to maximise Prioritising infrastructure including social sectors investments; benefits.
3 2020 National Budget Highlights The People’s Budget 2020 BUDGET ALLOCATIONS 6.0 Vote Appropriations Vote Appropriations Office of the President and Cabinet Parliament of Zimbabwe Labour and Social Services Defence Finance and Economic Development Audit Office Industry and Commerce Lands, Agriculture, Water, Climate and Rural Resettlement Mines & Mining Development Environment, Tourism and Hospitality Industry Transport and Infrastructural Development Foreign Affairs and International Trade Local Government, Public Works and National Housing Health and Child Care Primary and Secondary Education Higher & Tertiary Education, Science and Technology Development Women Affairs, Community, Small and Medium Enterprises Development Home Affairs and Cultural Heritage Justice, Legal and Parliamentary Affairs Information, Publicity and Broadcasting Services Youth, Sport, Recreation, Arts and Culture Energy and Power Development Information Communication Technology, Postal and Courier Services National Housing and Social Amenities Judicial Services Commission Public Service Commission Council of Chiefs Human Rights Commission National Peace and Reconciliation Commission National Prosecuting Authority Zimbabwe Anti-Corruption Commission Zimbabwe Electoral Commission Zimbabwe Gender Commission Zimbabwe Land Commission Zimbabwe Media Commission Sub Total Cons and Stats President Parliament Public Service, Labour and Social Welfare Comptroller and Auditor General Justice and Legal Affairs Judicial Service Commission National
 Prosecuting Authority Council Of Chiefs Welfare Services for War Veterans, Ex-Political Detainees and Restrictees and War Colleborators Pensions Sub Total 4 CRF ZWL$ 2,353,887,000 1,869,495,000 2,370,562,000 3,112,708,000 3,987,042,000 151,930,000 367,260,000 11,163,481,000 293,197,000 425,100,000 3,089,800,000 1,385,435,000 1,760,278,000 6,459,100,000 8,495,794,000 2,213,900,000 2020 Estimates Retention ZWL$ 407,000 5,000 753,000 170,978,000 60,528,000 190,276,000 119,378,000 19,506,000 108,217,000 30,429,000 676,989,000 Total ZWL$ 1,300,000
59,046,522,000 5,200,000 2,600,000 1,300,000 1,300,000 2,600,000 37,700,000 1,300,000 57,200,000 22,100,000 2,814,500,000 2,945,800,000 - 2020 National Budget Highlights The People’s Budget Vote Appropriations Interest Domestic External Sub Total Other Constitutional and Statutory Appropriations Transfers to Provincial Councils and Local Authorities Refunds of revenue Sub Total CRF ZWL$ 504,320,000 200,000,000 704,320,000 2020 Estimates Retention ZWL$ - Total ZWL$ 504,320,000 200,000,000 704,320,000 2,932,000,000 6,380,000 2,938,380,000 63,641,200,000 - 1,993,822,000 2,932,000,000 6,380,000 2,938,380,000 65,635,022,000 Grand Total Row Labels Defense Economic affairs Education Environmental protection General public services Health Housing and community amenities Public order and safety Recreation,culture,and religion Social protection Grand Total Expenditure by Economic Classification Sum of Consolidated Revenue Fund 2,933,731,000 16,235,751,000 10,789,817,000 84,344,000 17,610,577,000 6,459,100,000 2,340,348,000 4,126,874,000 591,876,000 2,468,782,000 63,641,200,000 5 2020 National Budget Highlights The People’s Budget 7.0 2020 PRIORITY AREAS 7.1.
Enhancing Productivity For Growth Agriculture promotion of diversification and broadening of product range.

and development, research  Embracing Climate Smart Agriculture (CSA) that harmonises agriculture development, with shared funding, environment protection and reduction to vulnerabilities to climate change.

 Developing rural growth poles.

 Guarantee scheme for companies to access capital for retooling purposes.
 ZWL$368.0 million to Ministry of Industry and  Forward planning: Early build up and ring-fencing of resources for production and importation of inputs.

 ZWL$422.8 million development: Target production of around 1.8 million tonnes.

towards irrigation grain guarantee to  Fiscal buffer of ZWL$165 million to cater for drought shocks and to strengthen early warning systems, among other drought proofing measures.

 ZWL$281.5 million towards agricultural extension and advisory services.
 ZWL$380 million toward interim compensation of former farm owners, prioritising the vulnerable and elderly.

Mining  Reaping benefits from concluded investment agreements in platinum, gold and chrome and others expected to boost mining output.

 Continued re-engagement with mining companies over power supply and viability challenges.

 Fine-tuning of fiscal regime for the mining sector.

 Support of Minerals Marketing Corporation through credit guarantee scheme to support non- gold sector.
 ZWL$293.2 million towards Ministry of Mines and Mining Development for its capacitation in terms of planning, promotion of exploration, data capturing and automation, among others.

 Tightening of the Gold Trade Act and capacitation of Gold Mobilisation Unit to reduce leakages.

 Concluding legal reforms Industry  Implementation Zimbabwe national Industrial Development Policy and Local Content Strategy;  Promoting value chains, export led- industrialisation and import substitution.
 Capitalising Industrial Development Corporation the (IDC) by ZWL$240 million, to support Commerce.

Tourism  Renewal of Fiscal Incentives  ZWL$291 million to the Ministry of Environment, Climate Change Tourism and Hospitality Industry.
 Increasing connectivity  Continuous improvements of facilities and products  Improved visa facilitation Construction & Housing  ZWL$2.68 million towards addressing housing backlog, including modernisation of dilapidated superstructures and infrastructural services such as sewer and water.

 Construction of New City in Mt Hampden, with New Parliament Building as the catalyst.
 Encouragement of private sector to invest in new technologies such as fibre networks, solar biogas, as well as buildings infrastructure through Public Private Partnerships (PPPs).

Tripartite Negotiating Forum  Reinvigorating social dialogue under the auspices of the Tripartite Negotiating Forum (TNF).

 Establishing an independent secretariat to oversee the work of the TNF as provided for in the TNF Act.
 Harmonisation of the country’s labour legislation, ensuring that legislative promotes productivity and upholds fair labour standards.

framework robust  Cooperation on ensuring a stable macro-fiscal environment.

6 2020 National Budget Highlights The People’s Budget Employment is at the core of the 2020 Budget.

7.2 Jobs Creation and Entrepreneurship The main driver of employment is a general economic upswing and increased investment on the back of improved macroeconomic stability.
Government will support targeted initiatives for job creation, ensuring that the fruits of economic recovery are shared across all parts of society, and serve to catalyse sustained economic development in the medium and long run.

Youth Employment Corporate Income Tax Credit Fiscal incentive to support employers who generate jobs for young job seekers.

Introducing a tax credit of ZWL$500 per month per employee for corporates that employ additional employees in a year of assessment.
The credit will, however, be limited to a maximum of ZWL$60 000 per year of to subject assessment, prescribed conditions.

This measure will reduce employers’ cost of hiring young people through a cost sharing mechanism.

National Venture Fund Labour-Intensive Infrastructure Development Empowerment The National Venture Fund for start-up the youth projects through affordable loans.

financing for Targeted Public Sector Investment Programme projects which (PSIP) create jobs.
Capitalising the following:  Zimbabwe Women Microfinance Bank  Women Development Thoroughly scrutinising the recipients to avoid fraudulent use of the funds.

Construction industry also targeted.

    Fund Community Development Fund SMEDCO and Empowerbank Youth Fund.

Employment Construction of MSME industrial parks, incubation centres, production and marketing centres in major centres to increase local production and export capacity.
7 2020 National Budget Highlights The People’s Budget 7.3 EQUITABLE AND INCLUSIVE DEVELOPMENT Infrastructure  ZWL$142 million allocated towards this development programme.

 Infrastructure Priority Plan: Roadmap towards infrastructure recovery, ensuring public assets are restored to full working condition.

 Funding includes resources from Budget, loans, development partners, public entities and statutory funds amounting to ZWL$24.6 billion.
Devolution and Transfers to Local Authorities  Communities to manage their own affairs, drive development, and ensures tiers of Government do not rely on the goodwill of the Central Government for resources.

lower  5% (ZWL$2.93 billion) statutory requirement for Provincial Councils and Local Authorities will be distributed to the lower tiers of government.

ICT/Digital Economy  Development of Smart Zimbabwe 2030 Master Plan for promoting ICTs across all sectors.
 Rolling out of National E-Government Programme.

 Simplify communication between citizens and Government.

 Creation of an effective system for Government Departments to interact with each other.

 Also enables citizens to gain quicker access to Government services, and leads to substantial monetary savings.

 ZWL$341.7 million allocated towards the above ICT programmes.
Water Supply and Sanitation  Restoring basic water and sanitation services through maintenance, rehabilitation and upgrade of infrastructure.

 Harnessing of water through construction of dams, weirs, borehole rehabilitation and drilling, and water and sanitation in urban areas.
Infrastructure Priority Allocations Education $1.9 bn Health $2.0 bn Transport $4.5 bn Housing $2.7 bn ICT $1.2 bn Agriculture Infrastructure $0.9 bn Water and Sanitation $2.5 bn Energy $8.9 bn Electricity Supply  ZWL$8.4 billion towards Rehabilitation and expansion of Hwange Thermal Power Station.

 Support alternative sources of energy such as solar power projects through fiscal incentives.

 20 IPP solar projects lined up for implementation.
Rural Electrification  Rural Energy Master Plan (REMP) to broaden modern energy access through the development of Grid Connected Solar and mini hydropower plants, among others.

 Rural Electrification Fund will invest in extending the grid to sites identified in the Rural Energy Master Plan (REMP), including Rural Growth Poles.

8 2020 National Budget Highlights The People’s Budget  ZWL$8.5 billion for Ministry of Primary and Secondary Education.
 ZWL$2.2 billion for Higher and Tertiary Education, Science and Technology Development.

 Provision for the supply of sanitary wear for female learners to the tune of ZWL$200 million.

Social Protection  Scaling up of social protection interventions in the wake of increased vulnerabilities among citizens.

 Public Service, Labour and Social Welfare is allocated ZWL$2.4 billion.
Social Protection Programmes Food deficit mitigation $1,020 m Food for Work and Income Generating Projects $50 m Harmonised Social Cash Transfer $500 m Basic Education Assistance Module $450 m Management Information System $10 m Decent Work Country Programme $300 m Development Partner Support  In 2020, Development Partners support is projected at US$677.6 million, compared to an expected US$610.4 million in 2019.
 Government is taking a pro-active role to address concerns that partners continue to raise over cost of corruption, transparency and accountability, security of tenure and investment climate in mining.
Water Supply and Irrigation Priority Projects Local authorities water and sanitation $311 m Water supply schemes $113 m Other dams $205 m Semwa dam $216 m Kunzwi dam $259 m Gwayi shangani dam $400 m Causeway dam $128 m Chivhu dam $192 m Transport  Sustaining Road Development Programme, including dualisation and upgrading of the Harare- Beitbridge Road, ongoing upgrading works on trunk roads, among others.

 Further provision for Urban Mass Transport System, providing affordable transportation to citizens.
 ZWL$540 million subsidy allocated towards this programme.

Health  ZWL$6.5 billion allocated to the sector.

 This will cater for health infrastructure, personnel welfare, medicines, drugs, and sundries, among other essential hospital equipment and necessities.

Education  Inclusive and equitable quality education and the learning opportunities promotion of lifelong remains top priority: Leave no child behind.
9 2020 National Budget Highlights The People’s Budget 7.4 COMPETITIVENESS Ease of Doing Business Second round of ease of doing business reforms, targeting 16 key areas including  improvements in paying taxes  obtaining construction permits  starting a business  ease of doing transport business  clearance of imports and exports Last year, significant milestones were achieved in this respect, and the country climbed from rank 155 to rank 140 in the World Bank’s ease of doing business ranking.
ZIDA  Establishment of a consolidated Zimbabwe Investment and Development Agency (ZIDA) as a one stop shop investment centre.

Export Revolving Fund  Support of exporters through Export Revolving Fund with US$20 million as seed capital, with a focus on horticulture.

Public Enterprises  Comprehensive programme enterprises and parastatals.

to reform state  Fast tracking of implementation of PE reforms.

 Enforce the provisions and regulations of the Public Entities Corporate Governance Act.
 Make necessary adjustments to all administered Fighting Corruption  Strengthening internal control systems through finalisation of the establishment of the Centralised Internal Audit Unit.

 National anti-corruption strategy with periodic monitoring and evaluation.

 Whistle blower legislation and protection in line with international best practices.

 Capacitating institutions established to combat corruption.

 Addressing conflict of interest issues where Government is both regulator and player.
Internal Systems Control & Compliance  Establishment of central coordinating unit for the internal audit and compliance function within Treasury.

Accountability & Transparency  Compliance with the Public Finance Management law and regulations by Ministries, Departments and Agencies.

 Adherence to procurement guidelines including payments for goods and awarding contracts.

 Spending within the Budget.

prices to ensure cost recovery.

 Implementing recommendations from Auditor General.
Research & Development  R&D Programmes supported by both Government and private sector.

 Budget has set aside resources for the R&D programme, including launch of space satellite.

10 2020 National Budget Highlights The People’s Budget 8.0 SUPPORT TO INDUSTRY AND REVENUE MEASURES Support to Industry  Suspension of Duty on Semi-Knocked Down (SKD) Kits Used by the Motor Vehicle Industry -Removal of SKD kits from the specified list of goods liable for duty in foreign currency extended to 3 years.
 Paint Manufacturing Industry -Ring-fence under suspension of excise duty, 150 000 litres per month, of illuminating power kerosene.

 Furniture Manufacturers: Small Scale Manufacturers -Introduce a Duty Refund Facility, whereby Small Scale Furniture Manufacturers pay duty on imported raw materials.

 Pharmaceutical Manufacturers Rebate -Provide for additional raw materials to be imported under Rebate of Duty.

 Suspension of Duty on Milk Powder - Extend Duty Suspension on milk powder for the year 2020.
 Suspension of Duty on Raw Cheese - Suspend duty on ring-fenced quantities of raw cheese.

 Clothing Manufacturers’ Rebate - Extend Rebate Facility for the clothing industry for a further 2 years.

 Luggage Ware Manufacturers’ Rebate - Extend the Rebate of Duty facility for a period of 2 years.

 Suspension of Excise Duty on Raw Wine - Extend and increase the excise duty free ring-fenced import quota from 175 000 litres to 200 000 litres per annum for a period of 2 years.
 Tourism Industry  Extend Rebate of Duty on capital equipment imported by operators for a further 3 years.

 Extend Suspension of Duty on motor vehicles used by Safari Operators for game views and drives.

 Introduce a Suspension of Duty facility to car hire companies for a period of 12 months.

 Extend the Suspension of Duty on the remaining vehicles used by tour operators.

 Cross-Border Luxury Coaches - Extend Suspension of Duty on the outstanding quota of luxury buses.
 Public Services Buses -Extend the Suspension of Duty Facility for the importation of 100 buses.

Revenue Enhancing Measures  Deemed Motoring Benefits - Review Deemed Motoring Benefits  Excise Duty on Tobacco - Review of the specific rate from ZWL$50 to ZWL$100 per 1 000 cigarettes.

Tax Relief Measures  Youth Employment Tax Credit  Introduce a tax credit of ZWL500 per month per employee for corporates that employ an additional employee in a year of assessment.
11 2020 National Budget Highlights The People’s Budget  Personal Income Tax Tax-Free Threshold -Review the tax free threshold from ZWL$700 to ZWL$2 000 per month and adjust the tax bands to begin at ZWL2 001 and end at ZWL50  Bonus Tax-Free Threshold -Review the tax free bonus from ZWL 1 000 to ZWL 5 000.

 Taxation of Retrenchment Packages -Revise the non-taxable portion of the retrenchment package to from ZWL 10 000 to $50 000 or one-third of the package, to maximum of $80 000.
Intermediated Money Transfer Tax (IMTT)  Value of Non-Taxable Transactions o Review the Tax-Free Threshold from the current ZWL$20 to ZWL$100 and the maximum tax payable per transaction by corporates from the current ZWL$15 000 to ZWL$25 000 for transactions with values exceeding ZWL$1 250 000.

 Bulk Payments through Mobile Banking Platforms -Exempt from IMTT, social transfers by Development Partners accredited in terms of the Privileges and Immunities Act [Cap 3:03].
 Corporate Income Tax Rate -Review the corporate income tax rate from the current rate of 25% to 24%.

 Value Added Tax Rate -Reduce the VAT standard rate from 15% to 14.5% to stimulate aggregate demand.

 Export Tax on Raw Hides - Extend the export relief facility for 2 years, renewable on an annual basis.

 Capital Gains Tax - Where immovable property is disposed in foreign currency, capital gains tax is also levied in the currency of trade.
However, where the seller fails to provide documentary evidence on the flow of transactions, such transaction shall be deemed to have been concluded in foreign currency.

 Royalty on Diamond - review the royalty on diamond from 15% to 10% of gross revenue.

Customs and Excise  Excise Duty on Fuel - ring-fence 5% of excise duty revenue collected on fuel towards the construction and rehabilitation of Beitbridge-Harare-Chirundu highway.
 Customs Duty on Sanitary Wear - extend duty exemption on sanitary wear by a further twelve months and also include sanitary cups and pants on the list of duty free products.
12 2020 National Budget Highlights The People’s Budget 9.0 DOWNSIDE RISKS MITIGATORY MEASURES Risk: Spending Outside Budget •Strictly refrain from unbudgeted activities •No borrowing from the Central Bank •No quasi-fiscal activities Risk: Wage Pressures •Government is committed to ensuring a decent standard of living to public servants.

•Take inflationary developments into account adequately in wage negotiations.

•Payment of all bonuses in November 2019.

•Establishment of the Public Service Pension Fund.


Risk: Subsidies & other Market Distortions •New cost-reflective pricing frameworks for fuel and electricity in place.

•Targeted and budgeted new grain subsidy model.

•Apply single exchange rate throughout all sectors of the economy.

•Essential subsidies to be clearly targeted and budgeted.

Risk: Financing Modalities of Agriculture •Government reiterates the policy position of shared financing between Government and private players.
•Financing of commercial agriculture, (including Command) now moving from being Government-led to Bank-led, with Government providing guarantees to banks.

•Thorough scrutiny of beneficiaries under bank-led financing.

•Loan guarantees by Government shall, however, only become effective after all legal efforts on loan recoveries have been exhausted.

•Direct financing support by Government will be targeted at vulnerable households under the Social Protection Programmes.
13 2020 National Budget Highlights The People’s Budget 10.0 CONCLUSION Current economic challenges are surmountable if we put our efforts together as a nation and continue taking bold and decisive steps to open up and grow the economy.

The monetary and fiscal reforms undertaken can lay a firm foundation for sustainable and inclusive economic growth.

Thrust is therefore centred on domestic production, productivity, and job creation.
We are not lost to broader understanding of human and overall development.

As Nobel Laureate Amartya Sen puts it, “human development is about expansion of citizens capabilities to fend for themselves”.

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