Zimbabwe cuts spending amid currency devaluation

Zimbabwe cuts spending as currency devaluation strains the budget, according to a circular to departments seen by Bloomberg and confirmed by Treasury on Monday. The Treasury has directed government departments to prioritise their spending for the remainder of the year, as non-wage budget support faces severe constraints.

According to the circular, the government outlined the need to mobilise additional resources to cover critical expenditures, including the 2024 bonus award, food-deficit mitigation, agricultural input support, and utilities. Moreover, the government has introduced cost-containment measures, such as limiting foreign travel, deferring local workshops, and cutting fuel allocations by 50 per cent.

The devaluation of the Zimbabwean currency has created a “substantial mismatch” between revenue and local currency expenditure, which must be settled immediately, according to George Guvamatanga, Secretary for Finance and Economic Development.

Zimbabwe is set to present its 2025 budget at the end of this month. However, Finance Minister Mthuli Ncube stated that funding requests had already exceeded ZiG 700 billion, far surpassing the budget ceiling of ZiG 140 billion.

Attribution: Bloomberg

Subediting: Y.Yasser