Treasury says 2027 expenditure requests twice projected revenue

Nqobile Bhebhe

Zimpapers Business Hub

THE Treasury anticipates collecting about ZiG300 billion (US$11,3 billion) in revenue next year against funding requests estimated at double the projected inflows, making expenditure prioritisation a key element of the 2027 National Budget.

Total revenue collections are projected at ZiG288 billion (US$9,5 billion) this year.

Finance Minister Professor Mthuli Ncube said competing demands submitted during the ongoing 2027 Pre-Budget Seminar in Bulawayo exceeded the available fiscal space.

This requires the Treasury to balance expenditure demands against the economy’s revenue-generating capacity.

The funding gap underscores the need to direct available resources towards critical public services, key infrastructure development and economic transformation while strengthening the economy’s resilience to climate-related and external shocks.

Speaking on the sidelines of the ongoing 2027 Pre-Budget Seminar on Wednesday, Minister Ncube said the requests reflected the importance of the budget consultation process, although the Government could not meet every demand.

The requests from this budget seminar far exceed the available envelope. The envelope is constrained to 18,1 percent of GDP (Gross Domestic Product), while their requests far exceed that limit, but that’s okay.”

The Treasury chief earlier revealed that Zimbabwe’s official nominal has reached approximately US$66 billion.

While the requests could be made, given the extensive expenditure demands, the finance minister said the Treasury was limited by the size of the economy and our collection capacity,” he said.

Minister Ncube said the projected ZiG300 billion revenue envelope meant that accommodating requests estimated at ZiG600 billion would be impossible without additional resources.

“For next year, we expect to raise about ZiG300 billion in terms of what we can raise, but their requests are double that.

“So, we are not able to actually meet that because we just wouldn’t have the revenue to meet double that figure,” he said.

The Treasury uses expenditure ceilings for individual ministries, informed by previous budgets and their capacity to absorb allocated resources.

However, these limits have attracted calls for increased allocations to meet growing sectoral demands.

Minister Ncube said the Treasury would consider the submissions as it finalises spending priorities.

“We have, you know, complicated ceilings for each ministry that we recommend, which are based on past budgets, usually, or on absorptive capacity and it is those ceilings that we have seen the reaction to, to say, why do we increase that ceiling, but of course we do listen as Treasurer,” he said.

The consultations come as the Government seeks to sustain economic growth while addressing investment requirements in education, healthcare, tourism and infrastructure.

Minister Ncube said the 2027 Budget would prioritise economic transformation and resilience against the anticipated El Niño-induced climate shocks and external pressures, including movements in global oil prices.

“The theme, as you know, is the theme of the budget, which is accelerating economic transformation and building resilience towards the climate shocks that we are expecting from El Niño and also the global shocks from the oil price,” he said.

He said improved economic performance presented opportunities to mobilise domestic resources to support national development programmes.

“But of course, we now need to make sure that the revenues that we are harnessing from the economy then support the various Government programmes,” he said.

Education and healthcare are among the sectors where additional investment could expand infrastructure and improve service delivery.

Minister Ncube said the Government could consider building more schools, recruiting additional teachers and expanding health infrastructure.

“There are certain areas where we feel, or maybe we could do more, we could do more there, especially in education, just building more schools, allowing for a higher number of teachers to be recruited.

“All those are sensitive areas, and for instance, if you look at the health sector budget, building more health centres,” he said.

Tourism has also called for increased funding to strengthen its contribution to economic growth, employment creation and foreign currency generation.

However, Professor Ncube said Government’s cash-budgeting approach limited its ability to rely on external resources to meet spending demands.

“If you run a cash budget, we do not have the luxury of external resources,” he said.

The funding gap presents the Treasury with the challenge of balancing rising demands for public services and infrastructure with the need to maintain fiscal discipline and ensure that expenditure is supported by available resources.

The 2027 National Budget is expected to set out the Government’s spending priorities in line with its economic transformation agenda and efforts to strengthen resilience against domestic and external shocks.

The national budget is set to be presented on November 19.

Source: Treasury says 2027 expenditure requests twice projected revenue – herald

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