Business Reporter
Finance, Economic Development, and Investment Promotion Minister Professor Mthuli Ncube is facing a daunting task as he prepares to present his fiscal policy statement amid a bleak economic outlook.
The economy is grappling with several critical issues, including:
- High unemployment rates
- Weakening local currency
- Severe power outages
- A plethora of taxes
- Shortages of foreign currency
- Declining corporate contributions to tax revenue
These factors have contributed to a shrinking tax base, which poses a significant threat to the Treasury’s financial health. Companies are struggling to survive due to increased costs of raw materials and are unable to meet their tax obligations, leading to downsizing or even collapse.
Key Challenges Ahead
Professor Ncube’s upcoming budget will be scrutinized for its effectiveness in addressing:
- Government Debt and Expenditure: Analysts emphasize the need for Ncube to rein in the government’s substantial debt and unsustainable expenditure levels.
- State Entities: The budget must tackle the issue of perennial loss-making parastatals. There is a pressing need for these entities to become financially self-sustaining, and some analysts suggest that selling off certain parastatals could alleviate the fiscal burden of ongoing bailouts.
- Remuneration of Government Workers: With many government workers declaring incapacitation and threatening industrial action, ensuring decent remuneration is another critical issue that Ncube must address.
The Path Forward
To revitalize the economy, Professor Ncube is urged to implement tough reforms that can turn the tide. This includes:
- Developing drastic plans to revamp state entities.
- Addressing the heavy tax burden and liquidity issues faced by businesses.
- Fostering an environment conducive to investment inflows and improving infrastructure.
The current economic climate is characterized by uncertainty and volatility, making it challenging for businesses to operate effectively. As the situation evolves, the government’s response will be crucial in determining the future trajectory of Zimbabwe’s economy.
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