THE government has approved plans to establish a subsidies framework as part of bold moves to contain public expenditure fuelling economic instability, a Cabinet minister has said.
Unrestrained subsidies, especially in the agriculture and manufacturing sectors, have in the past been blamed for fuelling the country’s economic woes.
And to rationalise critical government support in times of need, the ministry of Finance and Economic Development has come up with proposals on subsidies which Cabinet approved last week, Information, Publicity and Broadcasting Services minister, Monica Mutsvangwa said.
“Unmitigated and unbudgeted subsidies will need to be curtailed going forward as they undermine government’s fiscal consolidation objectives under NDS 1 (National Development Strategy 1), whilst also crowding out critical developmental expenditures,” Mutsvangwa said.
“Subsidies that are being provided will have explicitly identified funding sources, with costs adequately quantified to determine fiscal sustainability.”
The subsidies framework will help steer progress towards achievement of economic development objectives under NDS 1 which seeks to get Zimbabwe to upper middle income status by 2030, through bold re-alignment of public financés, Mutsvangwa said.
The government is currently running subsidy programmes in the agriculture sector through provision of inputs as well as crop producer prices which are aimed at supporting vulnerable groups.
“Crops under such support include maize, soya beans, cotton and wheat,” Mutsvangwa said.
Productive sectors have also been supported through tax concessions, as a way of improving viability, productivity and competitiveness.
“As a result, the government has foregone about US$2,3 billion through tax incentives during the period 2011 to May 2019,” Mutsvangwa said.
— STAFF WRITER/WIRES