No room for error, Mthuli must act or risk deepening Zim’s economic crisis

Today, Finance, Economic Development and Investment Promotion Minister Professor Mthuli Ncube stands at a critical juncture.

As he delivers the Mid-Term Budget Review, the country is watching — not with hope, but with wary anticipation.

Businesses are closing. Jobs are vanishing. Inflation is surging. The informal economy, once a safety net, has become a sign of systemic failure.

In this moment, there is no room for error. No time for half-measures.

This is not just another fiscal update, it is a national reckoning.

The economic outlook is dire.

Revenue is underperforming, debt is ballooning, and confidence — both public and investor — is paper-thin.

Against this backdrop, Professor Ncube must now choose between courage and caution.

The latter will only prolong the pain. The former, though politically difficult, is the only path to recovery.

Central to this moment is Zimbabwe’s punitive and distortionary tax regime.

The Intermediated Money Transfer Tax (IMTT), once intended to formalise and widen the tax base, has become a symbol of government overreach.

At 2%, it is throttling formal business activity and accelerating the migration into informal trading. It is a tax on every transaction — a silent killer of enterprise.

As Zimbabwe National Chamber of Commerce CEO Christopher Mugaga bluntly put it, “It’s a bad tax.”

Reducing the IMTT to at most 1% is not optional — it is essential for stimulating formal economic activity and restoring confidence.

Beyond tax, the structure of the budget itself is deeply flawed. Economist Eddie Cross has described the situation plainly: Treasury faces expenditure demands it cannot meet with current cash flows. That reality demands surgical reform — not mere accounting tricks. Raising the PAYE threshold from a laughable ZWG$100 to at least the Poverty Datum Line of ZWG$2,000 is long overdue. Continued failure to do so keeps millions of low-income earners trapped in fiscal hardship.

The bloated civil service remains an albatross around Treasury’s neck. Without meaningful efforts to rationalise the public wage bill, government will continue to operate beyond its means — crowding out social services and productive investment.

Meanwhile, loss-making state-owned enterprises continue to drain resources with no accountability or turnaround strategy.

Fuel is another structural choke point. Zimbabwe has the highest fuel prices in Southern Africa — US$1.55 per litre for petrol and US$1.50 for diesel — primarily due to excessive taxes and levies. These costs ripple across the entire economy, from transport to manufacturing, reducing competitiveness and raising the cost of living for ordinary citizens. As analyst Victor Bhoroma argues, this is not just a pricing issue — it’s a tax issue.

IMTT should be made deductible from VAT or corporate tax obligations to reduce its suffocating impact on formal business.

Debt is yet another looming threat. Converting unpaid obligations into Treasury Bills is not fiscal management — it is creative accounting that merely postpones the reckoning. Public debt already stands at US$21bn and could swell to US$23 bn if contractors remain unpaid.

As Professor Gift Mugano warns, this practice risks entrenching a vicious cycle of arrears, debt and default.

Even positive developments — such as the 6% projected economic growth or increased uptake of the ZiG currency — remain fragile and reversible. Without strong policy interventions to expand the use of ZiG and stabilise macroeconomic fundamentals, these gains will not hold.

The Mid-Term Budget Review is a moment for leadership, not survival. Zimbabweans are weary of promises. What they demand now is decisive action — action that reforms the tax system, curbs unsustainable spending, addresses debt transparently, and restores confidence in both the currency and the broader policy environment.

Professor Ncube has the tools.

He has the data.

What remains to be seen is whether he has the will.

Because make no mistake, today’s presentation will define more than a fiscal year.

It may well define Zimbabwe’s economic trajectory for the next decade.

Get it right, and Zimbabwe could begin to claw back lost ground.

Get it wrong, and the country risks slipping further into stagnation and despair.

There is no room for error. Not today.