LIVINGSTONE MARUFU AND SAMANTHA MADEThe mid-year budget review, delivered by Finance, Economic Development and Investment Promotion Minister, Professor Mthuli Ncube last Thursday, has drawn mixed reactions across the economic spectrum, with business leaders fiercely criticising its lack of urgency, while economists and consumer bodies acknowledged certain stabilisation efforts by Treasury.Hopes had been high that Professor Ncube would decisively address long-standing structural and macroeconomic challenges affecting the economy, including escalating taxes and shrinking formal sector activity.Instead, many business leaders felt the review fell short.“Based on the 2025 mid-year budget and review, there was nothing much to talk about, as it intends to review the cost of doing business, but at a moment when businesses are burning through high taxation The issue was urgent and was supposed to be treated with the urgency it deserved,” Kipson Gundani, CEO of CEO Africa Roundtable said.Gundani said government delays in implementing reforms around arrears clearance and debt resolution undermine the country’s economic recovery efforts.“The real reforms required to accelerate the arrears clearance and debt resolution strategy were not addressed immediately but are taking a longer route which may not yield results,” he said.He also flagged policy inertia regarding land reform and former commercial farmers’ compensation:“The compensation of the former farm owners and monetisation of land remain stagnant.”The business community expressed concern that the fiscal measures lacked immediacy, particularly around taxation.Zimbabwe National Chamber of Commerce CEO Christopher Mugaga said: “The budget review attempted to address the challenges in the economy but we wanted immediate action on taxes not the plans to address it as the action plan might take long to be implemented.”He singled out the IMTT for urgent removal “We wanted IMTT to be removed immediately, not some other time, as it has immensely affected formal banking and created a cash economy.”Mugaga also called for a rapid overhaul of state-owned enterprises, saying, “There was a need for an immediate action on parastatal reforms as they are bleeding the Treasury.”The Consumer Council of Zimbabwe (CCZ) said that despite signs of macroeconomic recovery, ordinary Zimbabweans were still burdened by high living costs and poor service delivery.“There remain areas of concern, especially regarding cost of living, consumer access to services, and transparency in pricing and regulation,” CCZ said.“The mid-term review highlights that month-on-month ZiG inflation remained stable, averaging 0.5%, with exchange rate stability at US$1: ZiG26.7 While this macroeconomic stability is commendable, consumers are still battling high prices.”“There is an urgent need for targeted price monitoring and enforcement mechanisms, especially on basic consumer goods and services,” the organisation said.On budget allocations, CCZ noted: “The review confirms significant allocations to education (ZiG16.1bn), health (ZiG7bn), and social protection (ZWG3.5bn)
These allocations are welcome but must be reflected in service quality and accessibility, especially in public health facilities, where availability of drugs and medical personnel remains erratic, school fees and associated costs, which remain unaffordable for many, and social safety nets, which often miss large sections of deserving beneficiaries due to bureaucratic limitations.”The council urged greater transparency in disbursements for programmes like BEAM, school feeding schemes, and health procurement It proposed community-level audits and citizen reporting platforms to enhance accountability.“However, consumers continue to shoulder indirect costs passed on by businesses including: unjustified price hikes under the guise of tax compliance, especially in the informal sector, [and] poor regulation of service charges (e.g., banking, mobile money, rentals),” CCZ said.“All tax reforms must be accompanied by stakeholder consultations, and the burden must not be disproportionately transferred to consumers.”Economist Vince Musewe added his voice to the criticism, arguing that the mid-term budget fails to address Zimbabwe’s structural economic deficiencies.“Although the Minister labels the budget transformational, that is certainly not the case,” Musewe said.“The budget does not deal with transforming a dual enclave economy into an inclusive one 6% growth is ambitious given the international geopolitics and the unstable falling commodity prices which we depend on.”He added: “We remain essentially an agrarian economy whose fate is largely driven by international commodity prices Infrastructure spend has however been significant but we are building roads not factories.”Musewe said that much of Zimbabwe’s current economic resilience was underpinned by remittances rather than domestic economic activity.“Urban poverty continues while disposable incomes are being driven mainly by diaspora remittances
The positive social impact that we should pursue to improve the quality of life for all remains elusive Growth might come but it is most likely jobless growth,” he said.Shepherd Kembo, Managing Director of Globavel International and Hilmax Engineering Zimbabwe, acknowledged government efforts but said more structural depth was required to ensure long-term resilience.“The 2025 mid-term review reflects a stabilising macroeconomic framework but falls short of providing the strategic boldness required to transition from recovery to resilience,” Kembo said.“Without accelerated execution and structural reform, the risk remains that headline growth will not translate into tangible improvement in livelihoods or investor confidence.”He said while inflation had been kept in check, thanks in part to the gold-backed ZiG currency, the broader public still had limited confidence in the local currency.“Annual inflation remains elevated, hovering around 95.8% in local currency terms, posing risks to consumer purchasing power and business planning,” he said.Kembo warned that government spending continues to be skewed toward wages, which accounted for over 55% of expenditure by mid-year, leaving little fiscal space for capital development.“While the review outlines promising figures, the core challenges of low disbursement rates, limited confidence in the local currency, slow industrial growth, and unsustainable debt arrears remain unaddressed.”Still, he acknowledged positive projections in several sectors.“Mining, manufacturing, services, and energy sectors are also set to post positive growth, with gold output expected to surpass 43 tonnes and foreign currency receipts having risen by nearly 30% to approximately US$6bn.”Kembo added that the government had disbursed only 35% of the national budget by mid-year.“While this reflects strong fiscal control, it also suggests bottlenecks in critical public service delivery, especially in health and education.”Research firm, FBC Securities offered a cautiously optimistic outlook.“Zimbabwe’s economic outlook reflects a cautiously optimistic recovery trajectory, albeit under tight fiscal and monetary conditions,” it said.The firm said growth will be driven by “a strong rebound in agriculture (+21.5%), continued expansion in mining (+5.3%) and a modest growth in manufacturing and services.”However, it flagged liquidity shortages as a constraint.“Tight liquidity conditions may constrain private sector activity, particularly in trade, construction and small enterprises, slowing down the pace of domestic demand recovery.”On the positive side, the firm said the external sector remains strong.“Foreign currency receipts are up 24% in early 2025, supported by higher export earnings and private loan inflows, while diaspora remittances remain steady.”But public debt and structural imbalances remain a concern “High public debt (US$21.5bn) and limited fiscal space continue to pose medium-term risks,” the firm said.FBC noted the rebasing of GDP to US$45.7bn lowered the debt-to-GDP ratio from over 60% to 46.5%, which improves the optics but does not eliminate the burden of legacy debt and arrears.“Debt sustainability however, remains constrained by external arrears, which continue to block access to concessional financing,” the firm said In H1 2025, government debt service reached US$176.28m.Investment banker and Zimbabwe Economics Society Vice President Misheck Ugaro said the review demonstrated that Zimbabwe’s economy was recovering, but the government should focus on broadening the tax base.“This is the benefit of low inflation due to the stable exchange rate
The rebasing of the GDP results in a reduction on debt ratio from above 60% to about 43% meaning Zimbabwe is not highly indebted,” Ugaro said “There is room therefore to actually reduce tax rates and encourage more economic players to be compliant The mid term review shows that the country’s economic recovery is strong.”Economist Dr Prosper Chitambara offered a more upbeat perspective.“I think it’s a generally good budget review because we are expecting things to improve as the year progresses, especially the third and fourth quarter,” he said.Chitambara said the proposed tax reforms were “a game-changing move” and could lead to better resource mobilisation without increasing rates “For as long as we maintain a tight monetary and fiscal policy, then we should be able to see even more improvement in terms of inflation
GDP projection obviously this year is a better year compared to last year, so I expect to have more boom in terms of growth for this year,” he said.The 2025 mid-year budget and economic review has laid bare the rift between immediate business expectations and longer-term economic planning.While stabilisation has been achieved on several fronts, the review has also revealed lingering frustrations over sluggish reforms, high taxes, and inadequate public service delivery.Related
LIVINGSTONE MARUFU AND SAMANTHA MADE
The mid-year budget review, delivered by Finance, Economic Development and Investment Promotion Minister, Professor Mthuli Ncube last Thursday, has drawn mixed reactions across the economic spectrum, with business leaders fiercely criticising its lack of urgency, while economists and consumer bodies acknowledged certain stabilisation efforts by Treasury Hopes had been high that Professor Ncube would decisively address long-standing structural and macroeconomic challenges affecting the economy, including escalating taxes and shrinking formal sector activity Instead, many business leaders felt the review fell short “Based on the 2025 mid-year budget and review, there was nothing much to talk about, as it intends to review the cost of doing business, but at a moment when businesses are burning through high taxation
The issue was urgent and was supposed to be treated with the urgency it deserved,” Kipson Gundani, CEO of CEO Africa Roundtable said Gundani said government delays in implementing reforms around arrears clearance and debt resolution undermine the country’s economic recovery efforts “The real reforms required to accelerate the arrears clearance and debt resolution strategy were not addressed immediately but are taking a longer route which may not yield results,” he said He also flagged policy inertia regarding land reform and former commercial farmers’ compensation:
“The compensation of the former farm owners and monetisation of land remain stagnant.”
The business community expressed concern that the fiscal measures lacked immediacy, particularly around taxation
Zimbabwe National Chamber of Commerce CEO Christopher Mugaga said: “The budget review attempted to address the challenges in the economy but we wanted immediate action on taxes not the plans to address it as the action plan might take long to be implemented.”
He singled out the IMTT for urgent removal “We wanted IMTT to be removed immediately, not some other time, as it has immensely affected formal banking and created a cash economy.”
Mugaga also called for a rapid overhaul of state-owned enterprises, saying, “There was a need for an immediate action on parastatal reforms as they are bleeding the Treasury.”
The Consumer Council of Zimbabwe (CCZ) said that despite signs of macroeconomic recovery, ordinary Zimbabweans were still burdened by high living costs and poor service delivery.
Source: Zifmstereo
