Today marks the fourth day of the national lockdown in a bid to stop the spread of COVID-19. There is so much we talk about regarding how the lockdown is being rolled but I will reserve that for another time. There no doubt several implications for virtually all facets of society. Many people have been negatively affected by this lockdown given that Zimbabwe is largely an economy premised on the informal sector. On the 30th the finance minister released a press statement laying out what his ministry thinks is best in mitigating economic challenges that might be caused by this pandemic. The finance ministry is looking to address 3 key areas which we shall look at now.
Fiscal Resource Mobilization
The first worthy mention is the ZWL$100 million which has since been availed for COVID-19 initiatives. It is not exactly clear how this money is intended to be used in particular. There are also concerned amongst the general populace that the money is not enough given the huge task at hand. The other thing that treasury is focusing on is to reprioritize expenditures. Health, water supply and sanitation are being considered to be high priorities now. Be that as it may, other critically important aspects will still get the necessary attention. Some of them are road construction, dam construction and irrigation amongst others. These are considered central to economic sustainability so they cannot be shelved. The proceeds of the 2% Intermediated Money Transfer Tax (IMTT) will also now be primarily for COVID-19 initiatives.
With respect to allocations to various sectors from the previous budget, there will definitely be some budget cuts to redirect money towards initiatives related to the pandemic. During the onset of COVID-19 locally, US$2 million was made available by the treasury for urgently needed imports. In light of that more foreign currency will still be needed and possible strategies to mobilize it are being worked on. I guess saying the US dollar is now legal tender again is pursuant of that. Over 4 000 health sector posts have been unfrozen and an additional 200 medical posts have been created. This is obviously meant to increase the nation’s capacity to deal with any COVID-19 or related cases. At least 1 million vulnerable households have been earmarked to receive money under a Cash Transfer Programme. The Social Welfare Department has been tasked with the responsibility to identify eligible beneficiaries.
Supporting Economic Activity And Relief To Productive Sectors
With regards to corporate tax, ZIMRA shall fast track processes on refunds and requests for extension of the time period within which tax is payable without accruing interest and penalties for companies that shall experience COVID-19 related cash flow challenges. This is noble because several businesses or companies have been hit hard by the effects of the pandemic. VAT refunds which tend to cripple most businesses will also be processed in much shorter periods than the usual 60 days. Tax incentives have been put in place for production and importation of essential drugs and health-related capital equipment, as well as other medical supplies. Thus any players who will be instrumental in this will be rewarded by the vent of those incentives. Duty and tax on various list of goods and services related to testing, protection, sterilisation, and other medical consumables have been suspended. PRAZ has put in place measures that will ensure procurement processes takes as little time as possible. This will be of particular importance to consumables related to COVID-19 initiatives. Local industries are also being capacitated to actually manufacture such consumables here.
To date the partnerships with the following have been struck: the United Kingdom government; the Chinese government; the USA government; the Global Fund; the European Union, the World Bank; and the Chinese Foundation. The private sector has been playing an instrumental role in mobilizing material and financial resources which is commendable. The government appreciates their role and has expressed their commitment to assisting them in any way they can.
That is the bit about what the finance ministry is working on to ensure that this pandemic is kept out or in check locally. I would also like to reiterate that the private sector has been very active in rolling out initiatives. I believe with such commitments we will see the COVID-19 situation coming under absolute control.