Finance and Economic Development Minister Prof Mthuli Ncube says the country’s Gross Domestic Product (GDP) growth for the year will close at 4.6 percent down from 5.5 percent meaning the economy will grow at a much slower pace than earlier projected due to a frustrating agriculture performance.
The agriculture sector suffered heavily from intermittent rains which led to crop failure therefore undermining the general performance of the economy which is largely hinged on the sector.
Presenting the Mid-Term Budget and Supplementary Budget Paper this afternoon, the Minister said growth was alos hampered by depressed output, global geopolitical spillovers/ imported inflation and depreciation of the local currency which heightened inflationary pressures.
“Inflation has become a central cause of concern worldwide reaching highest level in more than 40 years for some of the advanced economies particularly in the US and in some of the European countries,”
“The local economy has not been insulated from global development particularly from rising global commodities prices and inflation as well as the disruption of supply chains as a result the domestic economic growth for 2022 has been revised downwards from the 5.5 percent we had predicted initially to 4.6 percent.”
This comes after the IMF slashed global GDP growth by 0.4 percentage points this week citing uncertainty and depressed economic output.
The minister has also added a supplementary budget to cater for increased government expenditures in this inflationary environment.
A Supplementary budget of ZW$ 929 billion has been proposed which takes the 2022 total budget to ZW$ 1.9 trillion against revenue target of ZW$ 1.7 trillion creating a budget deficit of ZW$ 200 billion.
The minister said the bulk of the additional ZW$ 929 billion will go towards compensation of employees and financing for the 2023 agricultural season.
The Minister also increased tax free threshold on PAYE and bonuses as part of wage value preservation.
Tax free threshold on PAYE has been raised form ZW$ 300 000 per annum to ZW$ 600 000 per annum while bonus tax free threshold has been raised from ZW$ 100 000 to ZW$ 500 000 beginning this November.