The Mid-Term Fiscal Review presented by the Finance Minister Honourable Tendai Biti on 18 July 2012 resulted in a cut in economic growth forecasts. Budget estimates were reviewed to $3, 64 billion from $4 billion following the underperformance of key economic sectors including mining, manufacturing and agriculture with diamond revenue initially anticipated as one of the key drivers of revenues underperformed.

He highlighted that the first half of 2012 has seen the economy underperforming characterised by low business and investor confidence, little growth in employment and declining social indicators. This was as a result of a number of factors that include poor rainy season, policy inconsistencies and uncertainties undermining investor confidence, revenue underperformance against a high and unsustainable wage bill crowding out social and infrastructure spending and corruption amongst other factors.

Following stagnation in the contribution of direct taxes — Value Added Tax and Pay As You Earn — to government revenue, which reflects that no new jobs had been created between 2010 to date, the Finance minister said the government had resolved to pin its hopes on foreign direct investment (FDI). “This economy needs FDIs to expand the small cake into a bigger cake that creates jobs,” Mr Biti said.

 Please click here to view the 2012 Mid-Term Fiscal Policy Review Statement