The government of Zimbabwe posted a budget surplus of ZWL$ 6.5 billion during the first three months of 2022 (Q1) on growth in income tax from inflation driven wage increases and improved economic activity which pushed value added tax.
This means the government spent less than what it earned during the period.
In its latest 2022 First Quarter Treasury Bulletin, the government total revenue stood at ZWL$ 181.2 billion against a target of ZWL$ 169.5 billion while its expenditure stood at ZWL$ 174.7 billion, which was below initial projection of ZWL$ 184.3 billion.
As a result, a budget surplus of ZWL$ 6.5 billion was achieved.
“The positive variance was on account of improved economic activity and the general wage increases effected in order to cushion employees against the rising cost of living,” the Treasury said.
Most revenue heads performed above quarterly targets save for corporate tax, other direct taxes and taxes on gross revenue.
The major contributors to revenue collections were VAT at 24.1 percent, followed by Pay as you earn (PAYE), 23.3 percent, Corporate tax, 10.6 percent and taxes on Financial and Capital transactions (IMTT) at 9.7 percent was on the fourth position while Excise Duty at 9.0 percent was on the fifth position.
Major expenditures were on compensation of employees, ZWL$47.5 billion, use of goods and services, ZWL$43.6 billion and Non-Financial Assets, ZWL$35 billion.
At 27.2% of total expenditure, compensation of employees constituted the largest share of the first quarter expenditures, up from 25.5% of total expenditures during the fourth quarter of 2021.
“Social benefit outlays during the first quarter of 2022 constituted 14.5% of the total expenditure at ZWL$25.3 billion, dominated by COVID-19 transfers to the vulnerable members of society.”
Use of goods and services at ZWL$43.6 billion, was the second highest expenditure constituting 25 percent of total expenditures, with rentals at ZWL$18.3 billion and other service charges and maintenance at ZWL$6 billion accounting for the bulk of the expenditures.
Grants to extra-budgetary units at ZWL$16.8 billion constituted 9.6 percent of total expenditure, mainly on account of reviews of the salaries and allowances (ZWL$12.4 billion) and devolution transfers (ZWL$8.5 billion).
Interest payments’ share to total expenditures accounted for 0.8 percent, which went towards servicing domestic debt of ZWL$1.3 billion.
Non-Financial Assets (capital expenditure) at ZWL$54.1 billion constituted the third largest share of total expenditures after compensation of employees and use of goods and services.
Notably, Treasury said the implementation of infrastructure projects is generally low during the first quarter of every year.
Meanwhile, the country exported goods worth US$1.8 billion during the first quarter, a 71 percent increase from US$1.1 billion, recorded during same period last year.
Agriculture exports increased by 170.6 percent with tobacco being the major contributor by an increase of 198.6 percent compared to the previous period last year. Mineral exports increased by 61.5 percent dominated by gold.
However, merchandise imports increased by 19 percent to US$1.9 billion from US$1.6 billion realized during the same period last year.
“This was attributed to a rise in international commodity prices which was as a result of Russia –Ukraine crisis which caused rise in the price of crude soya, fertilisers and fuel, among others,” said Treasury.
Consequently, the merchandise trade deficit decreased to US$18 million during the first quarter of 2022 from US$490 million recorded during the same period last year mainly attributable to a rise in the price of international precious minerals and tobacco.