Zimbabwe's budget review & analysis 2024

Zimbabwe is aiming to more than double its revenue collection in the 2024 financial year to 53.9 trillion Zimbabwe dollars. The government plans to fund its expenditure, which is expected to grow by a similar margin, through the introduction of more aggressive taxes on corporates, micro and small enterprises, as well as the wealthy. Consulting group M&A has raised concerns about the aggressive and accelerated tax collection approach presented in the 2024 National Budget, warning of catastrophic effects on vulnerable groups in the country. Batanai Matsika, the Director of Insights & Research at M&A Consulting Group, expressed his reservations about the budget, particularly highlighting the significant portion of the money supply in US dollars despite the budget's presentation in Zimbabwe dollars. Matsika pointed out that the economy's tax base remains lean and the government's aggressive tax proposals aim to target the informal economy. These measures could result in increased pressure on household disposable incomes, affecting consumption patterns and vulnerable groups within society. While acknowledging the government's need to raise revenue to fund services, pay down debt, and stimulate economic growth in Zimbabwe, Matsika emphasized the importance of a balanced approach. He recommended exploring non-tax revenue streams such as investment income and formalizing the economy to broaden the tax base. Matsika also raised concerns about Zimbabwe's massive external debt overhang, calling for more engagement efforts to address the issue. Regarding economic growth projections for 2024, Matsika expressed skepticism about the government's target of 3.5%. He cited potential challenges in key sectors like mining and agriculture, as well as external factors such as global trends and the threat of a drought due to the El Nino phenomenon. Matsika suggested a more realistic growth projection of around 2% due to the prevailing risks and constraints within the economy. In conclusion, Zimbabwe's aggressive tax approach in the 2024 budget has sparked debates about its potential impact on vulnerable groups and the overall economy. As the government strives to boost revenue collection and stimulate growth, experts like Batanai Matsika advocate for a balanced strategy that considers non-tax revenue sources, formalizes the economy, and addresses the challenges in key sectors to achieve sustainable economic development.