ZIMBABWE’S Finance minister Professor Mthuli Ncube says the country’s Gross Domestic Product growth for 2020 is projected at three percent, 1,6 percentage points lower than his initial growth projection of 4,6 percent.
Presenting the National Budget to parliament on Thursday afternoon, the Treasury chief said while the country’s economy was expected to contract by 6,5 percent this year, the 2020 budget would prioritise productivity and growth, an exit from 12 months of tight austerity.
This comes as the International Monetary Fund, IMF, recently said it sees Zimbabwe’s economy rebounding by 2,7 percent in 2020.
“This budget will focus on job creation, promotion of more sustainable and inclusive development, export diversification and import substitution,” the minister said.
He said the growth and productivity thrust would be supported by Zimbabwe’s re-engagement process with the International Community, which would enable the country to meet budget objectives.
Zimbabwe is presently battling triple-digit inflation, a power crisis that has seen fuel prices surge weekly while industry is plunged into 16-hour darkness and shrinking disposable incomes.
However, Ncube is optimistic that monthly inflation will fall to single digits in the 2020 first quarter, to close the year around two percentage points on the back of a tight monetary policy by the central bank.
Meanwhile, the minister said government has set aside ZWL$500 million for a venture capital fund, under a Presidential Youth Entrepreneurship Programme, to finance start-up projects that will mostly target young entrepreneurs.
Bringing much-needed relief to Zimbabweans, the minister announced that the tax-free threshold had been raised to ZWL$2 000 per month, from ZWL$700, with effect from January 2020.
The tax-free bonus has also been increased from ZWL$1 000 to ZWL$5 000 with effect from November 1, 2019.
Additionally, the tax-free portion of retrenchment packages will be increased from ZWL$10 000 to ZWL$50 000, or one-third of the package, to a maximum ZWL$80 000.
Zimbabweans will also breathe a collective sigh of relief as the Treasury Chief raised the tax-free threshold for the two percent intermediated money transfer from ZWL$20 to ZWL$100.
The maximum payable by corporates is now ZWL$25 000 from ZWL$15 000 currently for transactions above ZWL$1,25 million.
Prof Ncube also cut corporate tax from 25 percent to 24 percent from January 2020, while Value Added Tax will now be 14,5 percent with effect from January 2020, from the current 15 percent.