Mthuli unveils ZWG$290bn budget

LIVINGSTONE MARUFU / ROBIN PHIRI

Finance Minister, Professor Mthuli Ncube, has unveiled a ZWG$290 billion 2026 National Budget, positioning it as a reform-driven fiscal blueprint aimed at accelerating economic modernisation, sustaining growth, and consolidating development gains.

Presenting the budget in Parliament, Prof Ncube projected the economy to expand by 5% next year, insisting that despite persistent economic headwinds, Zimbabwe “remains on course to maintain its growth trajectory” as key structural reforms continue to take hold.

The Intermediated Money Transfer Tax (IMTT), which has dominated pre-budget debate, was adjusted, while Value Added Tax (VAT) was increased to help navigate constrained fiscal space. In a bid to support business activity and promote the use of the local currency, Prof Ncube reduced the IMTT on ZiG-denominated transactions from 2% to 1.5%.

“This move will promote the usage of local currency and lower transaction costs,” he said.

To offset the revenue foregone through the IMTT reduction, VAT will rise by 0.5 percentage points to 15.5%, effective January 1, 2026. The IMTT on foreign currency transactions remains unchanged at 2%.

In additional tax reforms, the minister made IMTT a tax-deductible expense for Corporate Income Tax purposes and broadened the definition of financial institutions under the IMTT framework to include microfinance institutions.

Prof Ncube said the revenue measures are crafted to consolidate gains achieved under the National Development Strategy (NDS1) and prepare the transition into NDS2. Among the proposals is a harmonised royalty structure for all gold producers, designed to ensure miners contribute a “fair share” of revenue to the fiscus during commodity price booms and to eliminate arbitrage across mining categories.

He also proposed the introduction of a Digital Services Withholding Tax, in lieu of VAT on imported services, targeting payments made to offshore digital platforms — including e-hailing services, online content fees, and satellite-based internet access charges.

“The tax will be withheld by paying agents, including financial institutions,” Ncube said.

The minister noted that 2025 marks the conclusion of the NDS1 implementation period, with most targets having been met. A key milestone, he said, was the introduction of the Zimbabwe Gold (ZiG) currency in April 2024, which he credited with restoring price and macroeconomic stability.

“This was achieved through concerted efforts by both the monetary and fiscal authorities, and it is very important to stay the course to sustain the stability, which is critical for the attainment of Vision 2030,” Prof Ncube said.

He stressed that sustaining reforms will require collective commitment “so that growth is shared through the creation of decent jobs with decent incomes, while also ensuring that vulnerable members of society are taken care of through transparent and credible social protection programmes.”

The minister said the Government will continue to push ease of doing business reforms to strengthen the investment climate. Inflation is expected to fall to single digits by the first quarter of 2026, underpinning currency stability, while the current account balance is projected at ZWG$1.4 billion next year, up from the ZWG$1.3 billion forecast for 2025, supported by strong export performance and diaspora remittances.

Cumulative revenue collections for 2025 are projected at ZWG$215.7 billion (US$7.96 billion) against expenditures of ZWG$219.46 billion (US$8.10 billion), yielding a budget deficit of ZWG$3.8 billion (US$140.1 million) — equivalent to -0.3% of GDP.

As at end-September 2025, Zimbabwe’s Public and Publicly Guaranteed (PPG) debt stood at ZWG$622.3 billion, or 44.7% of GDP.

For 2026, Treasury is targeting revenues amounting to ZWG$288 billion. Combined with projected borrowing capacity, Government expenditure will total ZWG$290 billion — 17% of GDP.

Prof Ncube reported that Zimbabwe received US$386.1 million in development assistance between January and September 2025, against a target of US$500 million. Development assistance for 2026 is projected at US$350 million — a 30% decline compared to the 2025 projection.

Sector allocations reflected strategic government priorities. The Ministry of Industry and Commerce received ZWG$459.8 million to support retooling and working capital for industry, as well as policy environment improvements. The Ministry of Mines and Mining Development was allocated ZWG$789 million to enhance operations and promote beneficiation. Tourism received ZWG$339.4 million to bolster the Ministry of Tourism and Hospitality Industry’s activities, with Prof Ncube saying the allocation will help “cement Zimbabwe as a destination of choice.”

The Ministry of Lands, Agriculture, Fisheries, Water, and Rural Development received the largest sector allocation at ZWG$26.8 billion, reflecting the budget’s emphasis on food security, climate resilience, and environmental protection.2026