ZiG devaluation forces government to cut budget spending

By Bloomberg News

HARARE: Zimbabwe’s currency devaluation is forcing the government to cut spending on certain budget items.

The country’s Treasury asked government departments to prioritize their spending commitments for the rest of the year as non-wage budget support will be severely constrained.

The country needs to mobilize additional resources to cover critical, unavoidable expenditures, including the 2024 bonus award, food-deficit mitigation, agricultural input support and utilities, according to a circular to departments seen by Bloomberg and confirmed by Treasury.

Cost-containment measures include limiting foreign travel, deferring local workshops, and cutting fuel allocations by 50%.

The depreciation of the ZiG currency created a “substantial mismatch” between revenue, which in some cases is a one-month lag, and local-currency expenditure, which needs to be settled immediately, George Guvamatanga, secretary for finance and economic development, said in the circular.

The southern African country is set to present its 2025 budget at the end of this month. However, Finance Minister Mthuli Ncube said that bids for funding have already surpassed ZiG 700 billion, far exceeding the budget ceiling of ZiG 140 billion.