The Zimbabwean government has been forced to implement spending cuts following a significant 43% depreciation of the Zimbabwean dollar (ZiG) against the US dollar in late September. In response to the devaluation, the Treasury has directed government departments to prioritize essential expenditures for the rest of the year, with non-wage allocations expected to face severe reductions.
A memorandum circulated to Permanent Secretaries and the Clerk of Parliament on November 13 warned that budget support for non-wage items would be significantly constrained.
George Guvamatanga, the Permanent Secretary for Finance, Economic Development, and Investment Promotion, explained that the sharp devaluation had led to a substantial gap between the country’s revenue inflows—often delayed by a month—and the immediate impact of the currency’s depreciation on local expenditure, thereby severely limiting the available fiscal space for the final quarter of 2024.
This fiscal imbalance was worsened by an October 2024 salary review for civil servants, which added further pressure on government finances.
In light of these challenges, Treasury has announced that funding for non-wage expenses will be drastically limited in November and December 2024. As part of efforts to prioritize critical spending, Treasury has outlined measures including:
– Prioritizing outstanding unpaid bills.
– Foreign travel approvals being contingent on external funding sources.
– Postponing all local workshops unless specifically approved by Treasury.
– Reducing fuel allocations for operational purposes by 50%.
The Zimbabwean government is set to unveil its 2025 budget later this month. However, Finance Minister Mthuli Ncube noted that proposed funding bids have already far exceeded the planned budget ceiling, reaching ZiG700 billion, well above the allocated ZiG140 billion.
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