Finance, Economic Development and Investment Promotion minister Mthuli Ncube presented the 2025 National Budget to Parliament last week on Thursday.
The 2025 National Budget is based on the theme, “Building Resilience for Sustained Economic Transformation”. The National Budget is an important instrument of resource allocation in order to ensure not just a rapid pace of GDP growth, but also the achievement of important development imperatives, such as price stability, employment creation, Universal Health Coverage (UHC) and sustainable development.
The National Budget can enhance the quality/pattern of economic growth in the country through facilitating structural transformation, technological upgrading and diversification by shifting resources from low value-added activities to those with higher value added.
The economy is currently experiencing a slow down with economic growth projected at 2% down from 5,5% in 2023; 6,5% in 2022; and 7,8% in 2021.
The African Development Bank also expects the Zimbabwean economy to grow by 2% in 2024, 1,6 percentage points lower than its previous forecast, owing to a combination of the drought, weak commodity prices, power outages and high public indebtedness.
Economic growth in the country over the past years has neither been employment-intensive nor poverty-reducing. Economic growth is vital to sustaining financing of critical productivity enhancing sectors such as education, health, and social protection.
The erratic and anemic economic growth has contributed to limited domestic resources being channelled to critical productivity and welfare enhancing sectors of the economy.
Slow economic growth often leads to a decrease in job creation and a rise in unemployment rates.
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The poverty rate remains high, estimated at 39,8% in 2023 down from its peak of 49% in July 2020 (World Bank, 2024). This is far from Zimbabwe’s aspiration to reduce the share of the population below the food poverty line to 10% by 2025 according to the NDS 1.
According to the 2023-24 Human Development Report, The Gini co-efficient has risen from 42 in 2011 to 50 in 2019 and 50,3 in 2023, implying that the gulf between the poorer and richer in the population has widened.
The El Niño-induced drought has resulted in a significant reduction in crop production, increasing food insecurities thereby exacerbating the poverty situation.
The high levels of poverty, inequality and food insecurity, especially among the vulnerable and marginalised groups, therefore, necessitate greater public spending on critical productivity-enhancing and poverty-reducing sectors of the economy, such as social protection, health, and education.
The country’s health sector continues to face myriad challenges that include: inadequate and depleted healthcare workforce; high disease burden; and inadequate and poor maintenance of healthcare infrastructure and ill-equipped hospitals.
This is in addition to prohibitive cost of emergency and specialist services with a lack of decentralisation of such services; lack of financial risk protection mechanism; inadequate budgetary allocation and gross public under investments; and public health threats, including pandemics against a background of a fragile health delivery system.
According to the World Health Organisation (WHO), in terms of the UHC Service Coverage Index, the country has an index of 55,04 as at 2021 up from 54,00 in 2017.
Zambia has an index of 55,84, while South Africa has an index of 70,95. The UHC Service Coverage Index is measured on a scale from 0 (worst) to 100 (best) based on the average coverage of essential services, including reproductive, maternal, newborn and child health, infectious diseases, non-communicable diseases and service capacity and access.
The country remains in debt distress with total Public Debt rising from an estimated US$10,7 billion in 2020 to US$17,7 billion as at the end of September 2023, ZiG287,2 billion (US$21 billion) as at June 2024 and ZiG524,3 billion as at end of September 2024 (US$21,1 billion).
Of the total public debt stock, external debt amounted to US$12,3 billion with the domestic debt amounting to US$8,7 billion.
Zimbabwe’s debt situation remains an impediment to both external sustainability and economic development.
The unsustainable stock of external debt has constrained access to concessional financing and to international markets, retarded economic growth, and hampered socio-economic development.
The huge public debt stock has reduced the availability of both local and external resources for social spending.
The high public debt has crowded out public resources from key welfare-enhancing sectors such as health care, education, and social protection.
The country will incur high debt servicing obligations amounting to ZiG19,2 billion, which is equivalent to 7% of overall.
While there has been a nominal improvement in allocation towards critical sectors of the economy that enhance the well-being and productivity of young people, such as education, allocations towards most productive sectors are still below regional and international benchmarks.
The two education ministries got the highest vote at ZiG56,9 billion constituting 20,6% of the total vote allocations, this is slightly above the Dakar Declaration target of 20%.
Agriculture got ZiG22,9 billion, which is 8,1% of the total votes and is below the Maputo Declaration target of 10%.
Social protection got ZiG19,8 billion, which is equivalent to 1,4% of GDP which is way below the Social Policy for Africa Agreement (2008) benchmark of 4,5% of GDP.
Public investments in water and sanitation are critical to deal with the threats from water-borne diseases such as cholera. The country has experienced cholera outbreaks in the past.
Government has allocated ZiG2,4 billion towards water and sanitation which represents just 0,2% of GDP, which is way below the 1,5% of GDP benchmark set under the eThekwini Declaration (2008).
The Global Task Force on Cholera Control considers WASH investments as the foundation to achieving the goal of reducing cholera deaths by 90% by 2030.
Health spending as a share of total government expenditure, is an indicator of the priority given to health.
The Ministry of Health and Child Care was allocated ZiG28,3 billion (US$785,9 million) in the 2025 National Budget.
The allocation represents about 10% of total projected public spending in 2025, a decline from the 10,6% allocated in 2024.
The Abuja target remains an elusive target for the country. Government also spends a relatively small share of its Gross Domestic Product (GDP) on health care projected at 2,1% in 2025 down from a projected 4% in 2024.
Per capita health spending on health is also expected to decline from US$71,8 in 2024 to US$65 in 2025.
- The official rate stood at US$1:ZiG25,3 as at November 28.
- Chitambara is a Harare-based scholar and economist. These weekly New Perspectives articles, published in the Zimbabwe Independent, are coordinated by Lovemore Kadenge, an independent consultant, managing consultant of Zawale Consultants (Pvt) Ltd, past president of the Zimbabwe Economics Society and past president of the Chartered Governance & Accountancy Institute in Zimbabwe. — [email protected] or +263 772 382 852.
