Zimbabwe’s finance minister talks budget promises, debt reforms & economic outlook

Zimbabwe's Finance Minister, Mthuli Ncube, recently hosted a conference in Harare to address the country's plans to clear debt arrears and restructure $12.7 billion in external debt. The goal is to return to the international capital markets for the first time since 1999. The conference brought together government representatives, creditors such as the Paris Club partners, and international financial institutions like the IMF, World Bank, African Development Bank, and European Investment Bank. Minister Ncube expressed positivity regarding the mood at the conference, highlighting a collaborative effort to assist Zimbabwe in addressing its external debt arrears. The Minister also discussed the significance of securing a staff-monitored program with the IMF to unlock international capital, with a visit from the IMF scheduled for the first quarter of 2025. The National Budget for 2025, presented by Minister Ncube, focuses on building resilience for economic transformation to elevate Zimbabwe to upper-middle-income status by 2030. Key areas of spending include allocating 10% of the budget to the agricultural sector to invest in irrigation schemes for climate resilience and supporting vulnerable populations through productive social protection programs. The budget also emphasizes investing in critical infrastructure to reduce business costs and facilitate growth in the manufacturing and mining sectors. In line with green initiatives, the government plans to incentivize the adoption of solar-powered electric vehicles and reduce duties on imported electric vehicles. Regarding currency stability, Minister Ncube highlighted the importance of maintaining fiscal discipline and tight monetary policy to support the currency. Incentives for the manufacturing sector include revamping infrastructure for local automobile assembly and providing rebates on imported machinery and equipment. The government aims to strengthen tax revenue by expanding the tax base, targeting informal sector operators and introducing new taxes like the wealth tax. One notable aspect of the budget is the allocation of funds to compensate white farmers for land seized during the Land Reform Programme in the early 2000s. Zimbabwe has agreed to pay a total of $3.5 billion for farm improvements, starting with an initial payment of $350 million and issuing farmers 10-year bonds for the remaining amount. The government has also engaged farmers covered by bilateral investor protection agreements from countries like the Netherlands, Germany, and Switzerland, with plans to compensate them over the next four years. These efforts align with Zimbabwe's commitment to restoring property rights and meeting constitutional obligations. Minister Ncube's comprehensive approach to budgeting and economic reforms reflects a determination to address Zimbabwe's debt challenges, promote sustainable growth, and attract investment opportunities. By prioritizing resilience, social protection, and green initiatives, the government aims to steer the economy towards a path of stability and prosperity.