Source: Government spending remains within 2025 budget targets – herald
Tapiwanashe Mangwiro, Zimpapers Business Hub
THE Government maintained fiscal discipline in the first-half of 2025, spending within its approved budget despite a shortfall in revenue collections, according to the latest Treasury data.
The consolidated statement of budget and actual figures for the period to 30 June, 2025, shows that while total revenue underperformed against projections, spending was correspondingly curtailed, keeping the overall fiscal position broadly aligned with budget targets.
Year-to-date, total revenue amounted to ZiG117,6 billion, falling short of the targeted ZiG118,7 billion, representing a marginal under-performance of just under 1 percent.
Tax collections, which account for the bulk of the income, reached ZiG115,5 billion against a budgeted ZiG117,1 billion, as weaker-than-expected corporate and trade-related tax inflows weighed on receipts.
Taxes on income and profits, at ZiG45,3 billion, were three percent below the target, reflecting slower profitability in some formal sectors.
Similarly, taxes on goods and services, the Government’s largest revenue stream, came in at ZiG55,9 billion, slightly below the projected ZiG56,9 billion.
Customs and excise duties registered ZiG 9,6 billion compared with a ZiG 10,1 billion target, showing a five percent shortfall largely attributed to subdued imports.
Non-tax revenue, including fees, levies, and fines, reached ZiG 2 billion, about six percent below plan.
Economist Misheck Rupungu said the mild revenue miss reflects a combination of tighter liquidity in the economy and a moderation in consumption as households adjust to the ZiG environment.
“We are seeing a structural slowdown in demand, which naturally tempers consumption-based taxes. However, the positive takeaway is that the Government did not respond with excessive borrowing,” he said.
Total expenditure stood at ZiG127,9 billion, about one percent below the planned ZiG129,0 billion, with both recurrent and capital spending kept under control.
Recurrent expenses, the Government’s biggest outlay, were ZiG118,9 billion compared to a target of ZiG120,4 billion, mainly due to restrained spending on goods and services and a slower pace of disbursements to some ministries.
Compensation of employees consumed ZiG75,2 billion, or 63 percent of total recurrent spending, staying within the payroll ceiling despite ongoing wage reviews in the public sector.
Capital expenditure reached ZiG9 billion, compared with a ZiG8,6 billion target, suggesting a modest overshoot driven by accelerated implementation of priority infrastructure projects in roads and energy. Analysts said this limited overrun reflects an effort to maintain growth momentum while preserving fiscal stability.
Economic analyst Namatai Maeresera noted that expenditure restraint, in an environment of below-target revenues, signals a maturing fiscal stance.
He said, “The Treasury deserves credit for maintaining control over spending rather than widening the deficit to chase political or populist objectives. This approach builds confidence in the ZiG regime and supports disinflation efforts.”
The Government recorded a small year-to-date deficit of ZiG10,3 billion, compared with the projected ZiG11,4 billion, indicating that fiscal outcomes were broadly in line with the approved budget.
Treasury officials said this consistency supports the ongoing transition toward medium-term fiscal sustainability and aligns with commitments under the Government’s stabilisation programme.
The marginal deficit, analysts said, remains manageable given Zimbabwe’s recent currency reforms and the Government’s focus on maintaining real spending within available resources.
“Fiscal prudence is critical right now,” Mr Rupungu said. “If Treasury continues to match expenditure with real revenue inflows, it reduces the risk of monetary financing, which has been the main driver of inflation in previous years.”
The Treasury is banking on continued improvements in tax administration and compliance under the Zimbabwe Revenue Authority’s (Zimra) digital modernisation plan to boost collections in the second half of the year.
Efforts to widen the tax base, particularly through formalisation of small and medium enterprises, are expected to partially offset subdued corporate and customs revenue.
Non-tax revenue sources such as mineral royalties and user fees, are also expected to contribute modestly in the remaining half-year, as commodity exports stabilise and remittances stay strong.
Mr Maeresera added that the next phase of fiscal policy must focus on efficiency rather than austerity.
“The aim should not just be spending less, but spending smarter, prioritising productive capital projects and cushioning vulnerable households,” he said.
Looking ahead, analysts see fiscal policy remaining anchored on stability. The Government’s ability to stay within budget while maintaining essential services is seen as a confidence booster for investors and development partners watching Zimbabwe’s macroeconomic trajectory.
The Treasury’s cautious spending approach, paired with ongoing efforts to digitise revenue systems, could position Zimbabwe for improved fiscal credibility heading into 2026.
However, external vulnerabilities, including commodity price fluctuations and climate-related shocks, remain potential headwinds.
“The second-half will be the real test,” Mr Rupungu cautioned. “Revenue momentum must pick up without eroding economic activity. If the Government sustains fiscal discipline while supporting growth, we could see renewed macroeconomic stability by year-end.”
Overall, the half-year fiscal statement paints a picture of steady, if restrained, management of public finances.
The Government’s ability to contain expenditure within budget limits, even as revenues lagged, underscores its commitment to maintaining fiscal discipline in a challenging economic environment.
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