HARARE — The government narrowly missed third-quarter budget revenue targets as economic growth slowed and mineral royalties fell, underlining the tough task that President Robert Mugabe’s administration faces to lift the economy.
Mugabe (89) and Africa’s oldest leader, returned to power with a thumping victory in a July 31 vote disputed by his rivals and has promised to turn around the economy and create jobs while pursuing a controversial policy of forcing foreign-owned firms to hand over majority shares to black nationals.
The Zimbabwe Revenue Authority (Zimra) said on Thursday it collected $897 million between July and September against a target of $905 million.
It said many companies were scaling down operations or had totally shut down.
“The economy continued to face challenges such as erratic power supplies, liquidity constraints, depressed industrial capacity, among other challenges,” Stanford Moyo, the Zimra chairman, said.
Manufacturers have been the most hit, operating at a third of capacity and battling high financing costs and demands for higher wages from restless workers.
Moyo said company tax collections were 3% short of target and mining royalties were 39% below projections, blaming this on fluctuating mineral prices and failure by some diamond mines under Western sanctions to sell their stones.
“Mining royalties were negatively affected by fluctuations in international prices of minerals,” he said.
“In addition, royalties from diamonds were negatively affected by the placing of some diamond mining companies under sanctions.
“Therefore, the recent decision by the European Union to lift sanctions that had been imposed on ZMDC will go a long way in aiding the performance of this revenue head.”
The European Union last month indicated it would remove sanctions on the State-owned Zimbabwe Mining Development Corporation, a joint shareholder in four diamond mines.
This could boost future government revenues.
Zimbabwe is also a significant platinum producer.
Individual tax collections rose 23% after the tax agency extended its net wider, but the troubles facing local companies would see a decline in future, Moyo said.
Zimbabwe’s economy is expected to grow by 3,4% this year, down from earlier projections of 5%.
New Finance minister Patrick Chinamasa is expected to present the 2014 national budget next month.
— Reuters/New Zimbabwe