Crunch time for Mthuli

LIVINGSTONE MARUFU

Finance, Economic Development and Investment Promotion Minister, Professor Mthuli Ncube, steps into the spotlight today as he delivers the Mid-Term Budget Review, a critical intervention expected to confront Zimbabwe’s deepening economic crisis and chart a path toward stability.

With companies closing, retrenchments accelerating, inflation surging, and the informal economy expanding at an unsustainable pace, expectations are high that Professor Ncube will unveil bold fiscal adjustments aimed at restoring macroeconomic balance and reviving confidence across sectors.

The stakes are high, and the margin for error is narrowing.

“The Mid-Term Review is going to be very difficult,”economist Eddie Cross told Business Times, a market leader in business, financial and economic reportage

“The Minister of Finance faces demands for additional expenditure which he cannot meet from existing cash flows. The only solution is some form of real surgery to the whole budget process — and I can’t see that happening.”

Cross added: “He will have to review parts of government income and expenditure policies, particularly PAYE, where the starting limit of ZWG$100 is simply ridiculous. That should be raised at least to the Poverty Datum Line, which is around ZWG$2,000. We also need to address the bloated civil service, which is simply over and above what we can afford.”

Other economists, industrialists and business lobby groups are united in urging Treasury to address Zimbabwe’s punitive tax regime, particularly the controversial Intermediated Money Transfer Tax (IMTT), which is blamed for throttling both formal business and informal trading activity.

“We expect [ Professor Ncube] to reduce the IMTT to 1% at most. It is a problem. It is a cost,” said Zimbabwe National Chamber of Commerce CEO Christopher Mugaga.

“The immediate money transfer tax is impacting negatively across the economic spectrum — from banks to small businesses to individuals. It’s a bad tax.”

Persistence Gwanyanya, an economist and Monetary Policy Committee member, echoed similar sentiments, stressing the need for a regulatory overhaul.

“Importantly, we expect measures to deal with the management of debt, which continues to weigh on the country’s recovery prospects. Treasury is advised to proactively restructure or renegotiate domestic debt, especially Treasury Bills,” he said.

Gwanyanya also emphasised the importance of increasing use cases for the Zimbabwe Gold (ZiG) currency to drive demand and confidence.

“Taxes, duties, and statutory fees are key drivers of the demand for local currency. It’s comforting that authorities have enacted a law compelling payment of 50% of corporate taxes in ZiG. More should be done to increase use cases.”

Zimbabwe’s public debt situation remains precarious.

Economists warn that continued delays in government payments to contractors — and the conversion of those arrears into Treasury Bills — could see total public debt swell from US$21bn to US$23bn, further complicating recovery prospects.

“Government should pay contractors for services rendered. Delayed payments will increase the debt stock as authorities transfer these obligations to the Treasury, raising the public debt to US$23bn from the current US$21bn,” said economist Professor Gift Mugano.

He also urged the government to speed up arrears clearance and pursue a debt resolution strategy to unlock credit lines and restore investor trust.

The Mid-Term Review is also expected to address Zimbabwe’s bloated public sector and loss-making parastatals, which continue to drain the national budget. Treasury’s inability to reform these state institutions has long been viewed as a drag on economic performance.

Fuel remains another structural challenge. Zimbabwe has the highest fuel prices in Southern Africa — currently US$1.55 per litre for petrol and US$1.50 per litre for diesel — driven largely by taxes and levies.

“Zimbabwe’s fuel price of US$1.55 per litre for petrol and US$1.50 for diesel is the highest in Southern Africa,” said economic analyst Victor Bhoroma. “There is a need to reduce the direct and indirect taxes on fuel. Also, IMTT should be made deductible from corporate or VAT obligations, like other transaction taxes, to relieve formal businesses.”

Despite the pressing need for bold measures, analysts warn that Professor Ncube’s fiscal space is severely constrained by revenue underperformance and growing expenditure demands.

“I don’t have much expectation for the Mid-Term Review,” said Dr Prosper Chitambara. “From past experience, there are no major changes to the fiscal framework. We might see some update on revenue performance, but not sweeping reforms.”

Chitambara acknowledged gains in agriculture and mining, and a projected 6% economic growth this year, but warned that these improvements remain fragile.

“Yes, there have been improvements this year, especially from the agriculture season… But don’t expect bold policy shifts.”

Today’s review is more than a fiscal checkpoint.

It’s a critical opportunity for Ncube to signal serious intent, build public and investor confidence, and reaffirm macroeconomic credibility.

But with limited fiscal room, high political stakes, and entrenched inefficiencies, success will require more than promises.

If Ncube gets it right, he could ignite a new phase of confidence-driven recovery.

If he gets it wrong, Zimbabwe risks slipping deeper into economic stagnation , with devastating consequences for jobs, investment and livelihoods.