The Zimbabwe government spending pushed domestic borrowing to US$338 as at March this year from US$75 million. This is according to the latest report from the central bank.
The latest monthly economic review report from the RBZ notes that broad money supply was US$4 370.32 million in March 2015 up from US$4 337.89 million in February 2015.
The annual growth of broad money, however, decelerated from 7.86% in February 2015 to 6.75% in March 2015.
“Contributing to the annual growth in broad money were increases in long term deposits, of 29.29%; savings deposits, 9.97%; and demand deposits, 2.19%. Short term deposits, however, registered a decline of 2.58% over the same period. The structure of deposits remained largely the same with demand deposits accounting for 48.51%; long term, 20.32%; short-term, 18.53%; and savings deposits, 12.61%”, read the report.
The government’s borrowing though has crowded out industries denting any chances of improving industrial capacity utilization currently at 39%.
Finance minister Patrick Chinamasa’s US$4,1 billion 2015 national budget exposed a deep fiscal crisis gripping government amid shock revelations that government will spend 92% of revenues in recurrent expenditures, leaving a negligible 8% for capital projects and service delivery.
Tax receipts have disappointed over recent years partly due to company closures. Chinamasa announced in his budget for 2015 that 4610 companies closed shop between 2011 and 2014 resulting in the loss of more than 55 000 jobs.
The cash-strapped government is also known for incurring millions of dollars in unauthorized expenditures by its various ministries and departments.
Former Zimbabwe National Chamber of Commerce president, Luxon Zembe, told VOA that government borrowing is stifling economic growth.