Finance Minister Patrick Chinamasa on Thursday announced a $4.1 billion national budget for 2015 with a huge chunk of it expected to cater for the government wage bill.
The finance minister also announced proposals for the current tax-free threshold of $250 to be reviewed to $300 a month as workers struggle to make ends meet.
Presenting the 2015 national budget in parliament, Chinamasa said the closure of companies in Zimbabwe has become a serious impediment in reviving the nation’s ailing economy, which he projected will grow by at least 3.2 percent next year.
He said there is need for an economic rescue package to save companies from shutting down due to lack of capital.
Chinamasa told parliament that 4,610 companies shut down and 55,443 workers lost their jobs between 2011 and 2014.
The minister further said government workers are chewing at least 82 percent of the national budget while at times doing nothing in their offices.
He said the nation is expected to face challenges in generating money for capital expenditure though it is set to record the marginal growth of 3.2 percent.
Chinamasa said there is also need for Zimbabwe to re-engage international money lending institutions such as the World Bank and the International Monetary Fund with a view of seeking debt relief.
He noted that Zimbabwe has an external debt overhang of $8 billion and is failing to repay its arrears.
The finance minister also called for policy reforms that would lead to significant foreign direct investment and urged potential investors to negotiate with line ministries on shareholding structures.
Foreign-owned businesses are currently required to cede at least 51 percent of their shareholding to black Zimbabweans.
Chinamasa also called for transparency and accountability in the mining sector, adding that a joint monitoring taskforce would be put in place very soon to take care of some of the challenges in this sector.
The minister said government is expected to reduce taxes for companies that are licensed to cut and polish diamonds so that that the country benefits more from the gems.
He said Zimbabwe is currently exporting rough and uncut diamonds, depriving the nation of a lot of potential revenue.
Chinamasa also said government is expected to establish a women’s bank in line with cabinet authority to allow the country’s women to easily access project loans.
He added that development partners have shown interest in the dualization of all the country’s major roads and has invited joint venture partners to come on board in order to improve the country’s transport network.
As part of the government’s revenue generation measures, the minister said levy on tobacco farmers would be re-introduced with effect January 1, 2015.
He also said the government proposes to increase excise duty of cigarettes from $15 per 1,000 sticks to $20 for the same number of sticks.
At the same time, he proposed the introduction of taxes with effect from January 1, 2015, on imported goods like plain bread, buns, dough and cakes sourced from Cape Town, South Africa.
Some economists believe that these measures will lead to the increase in prices of cigarettes and imported bread, buns, cakes and related products.